ACCT607 Name Applied Case Assignment #6 (Chapters 9 and 10) Marriott International Inc. (NASDAQ: MAR; Bethesda, MD; hereafter, â€œMarriottâ€ or â€œthe Companyâ€) is a worldwide operator, franchisor, and licensor of hotels and timeshare properties under numerous brand names at different price and service points, including the Ritz-Carlton, BVLGARI, and Courtyard by Marriott. The Company became a public company in 1998 when it was â€œspun offâ€ as a separate entity by the company formerly named â€œMarriott International, Inc.â€ Use the attached financial statements and selected notes to the financial statements from Marriottâ€™s 10-K for the year ended December 31, 2014 to answer the following questions. (You will not need to supplement with outside sources of company data in order to answer the questions.) 1. Write out the fundamental accounting equation, and identify the values for thefundamental accounting equation for the Companyâ€™s 2014 yearend. (Youâ€™ll notice something unusual about how this equation has balanced. This question previews one of our topics for next week! For the rest of this assignment, weâ€™ll focus on liabilitiesâ€¦) Liabilities = Assets â€“ Shareholder Equity and Shareholder Equity = Assets â€“ Liabilities. 2. Compute and evaluate the Companyâ€™s current ratio as at December 31, 2014 and 2013. Based on these computations, has liquidity increased or decreased during the currentyear? 3. (a) Is the Companyâ€™s â€œLiability for guest loyalty programsâ€ a deferred revenue or an accrued liability? Explain. (b) What percentage of the Companyâ€™s total liability for guest loyalty programs is expected to be resolved in the coming fiscal year (that is, in2015)? 4. (a) The attached â€œCommitments and Contingenciesâ€ footnote indicates that the Company has a â€œcommitment, with no expiration date, to invest up to $11 million in a joint venture fordevelopment of a new propertyâ€ and that it expects â€œto fund this commitment in 2015.â€ Yet, the footnote also indicates that no liability has yet been recorded on the Balance Sheet. Whynot? (b) The attached â€œCommitments and Contingenciesâ€ footnote also indicates that the Company hasbeen named as a defendant in a lawsuit filed by several former Marriott employees. Yet, no liability has been recorded on the Balance Sheet. Under what circumstances would this beinappropriate? 5. The Companyâ€™s Long-Term Debt footnote (not attached) includes the following information: In the 2013 third quarter, we issued $350 million aggregate principal amount of 3.4 percent Series M Notes due 2020 (the â€œSeries M Notesâ€). We received net proceeds of approximately $345 million from the offering, after deducting the underwriting discount and estimated expenses. We payinterest on the Series M Notes on April 15 and October 15 of each year, commencing on April 15,2014. These Series M Notes are described as: Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%) (a) What journal entry would have been recorded in the third quarter of 2013 to record theissuance of the Series MNotes? (b) Record the interest payment and interest expense on April 15 and October 15, 2014. Assumethe effective interest method, and record your responses to the nearest thousand dollars. April 15: October 15: (c) Assume that, at the end of 2014, the prevailing market rate for interest obligations similar tothese notes was 4.0%. What would be the approximate net carrying or book value of the notes at the year end?Explain. EXCERPTS FROM MARRIOTT INTERNATIONAL, INC.â€™S 10-K FOR THE YEAR ENDED DECEMBER 31, 2014 MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME Fiscal Years 20
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