Insight on Liabilities and Shareholders’ Equity

The December 31, 1998 and 1997 liabilities and stockholders’ equity of Motorola follow:

CONSOLIDATED BALANCE SHEETS (In Part)

(In millions, except per share amounts)

Motorola, Inc. and Subsidiaries

December 31

1998

1997

Liabilities and Stockholders’ Equity

Current liabilities

Notes payable and current portion of long term debt

$ 2,909

$ 1,282

Accounts payable

2,305

2,297

Accrued liabilities

6,226

5,476

Total current liabilities

11,440

9,055

Long term debt

2,633

2,144

Deferred income taxes

1,188

1,522

Other liabilities

1,245

1,285

Stockholders’ equity

Preferred stock, $100 par value issuable in series

Authorized shares: 0.5 (none issued)

Common stock, $3 par value

Authorized shares: 1998 and 1997, 1,400

Issued and outstanding: 1998, 601.1; 1997, 597.4

1,804

1,793

Additional paid in capital

1,894

1,720

Retained earnings

8,254

9,504

Non owner changes to equity

270

255

Total stockholders’ equity

12,222

13,272

Total liabilities and stockholders’ equity

$28,728

$27,278

Required

a 1. The statement is entitled “Consolidated Balance Sheets.” What does it mean to have a consolidated balance sheet?

2. Does it appear that the subsidiaries are wholly owned? Explain.

b. Describe deferred income taxes.

c. 1. Describe long term debt.

2. Why is the current part of long term debt disclosed under current liabilities?

d. Describe retained earnings.

e. 1. How many shares of common stock have been issued at December 31, 1998?

2. How many shares of common stock have been authorized at December 31, 1998?

f. 1. What are the total liabilities at December 31, 1998?

2. What is the total stockholders’ equity at December 31, 1998?

3. What is the total asset amount at December 31, 1998?