Putting it Together: Other Assets

Remember that creating financial statements is like the scorecards of businesses, and we accountants are responsible for following the rules (GAAP) and creating an accurate picture of how the game is going. In addition, you are learning to read these complicated scorecards.

For instance, here is the income statement for ExxonMobile for the fiscal year ended December 31, 2019:

CONSOLIDATED STATEMENT OF INCOME (in millions of dollars)
Note Reference Number 2019 2018 2017
Subcategory, Revenues and other income
      Sales and other operating revenue 255,583 279,332 237,162
      Income from equity affiliates 7 5,441 7,355 5,380
      Other income 3,914 3,525 1,821
            Total revenues and other income Single Line264,938Single Line Single Line290,212Single Line Single Line244,363Single Line
Subcategory, Costs and other deductions
      Crude oil and product purchases 143,801 156,172 128,217
      Production and manufacturing expenses 36,826 36,682 32,690
      Selling, general, and administrative expenses 11,398 11,480 10,649
      Depreciation and depletion 9 18,998 18,745 19,893
      Exploration expenses, including dry holes 1,269 1,466 1,790
      Non-service pension ad postretirement benefit expense 17 1,235 1,285 1,745
      Interest expense 830 766 601
      Other taxes and duties 19 30,525 32,663 30,104
            Total costs and other deductions Single Line244,882Single Line Single Line259,259Single Line Single Line225,689Single Line
Subcategory, Income before income taxes 20,056 30,953 18,674
      Income taxes 19 5,282 9,532 (1,174)
Subcategory, Net income including noncontrolling interests Single Line14,774 Single Line21,421 Single Line19,848
      Net income attributable to noncontrolling interests 434 581 138
Net income attributable to ExxonMobil Single Line14,340Double Line Single Line20,840Double Line Single Line19,710Double Line

Already, you can see this is a consolidated statement, which means ExxonMobile over the years has purchased controlling interests in other companies and is rolling those financial results into one all-inclusive statement.

At the bottom of the income statement, you’ll see the company has subtracted a portion of income from the consolidated subsidiaries that is attributable to other owners—the noncontrolling interests. You can also see a line for depreciation and depletion—two concepts that might not have meant anything to you until recently.

On the balance sheet, you can see a line for investments placed between current assets and PP&E, indicating those are available-for-sale investments being held long-term, along with long-term notes receivable, and you can see PP&E is being reported “net” of accumulated depreciation and depletion.

CONSOLIDATED BALANCE SHEET (in millions of dollars)
Note Reference Number Dec. 31 2019 Dec. 31 2018
Subcategory, Assets
      Subcategory, Current assets
            Cash and cash equivalents 3,089 3,042
            Notes and accounts receivable, less estimated doubtful amounts 6 26,966 24,701
            Subcategory, Inventories
                  Crude oil, products and merchandise 3 14,010 14,803
                  Materials and supplies 4,518 4,155
            Other current assets 1,469 1,272
                  Total current assets Single Line50,52 Single Line47,973
      Investments, advances, and long-term receivables 8 43,164 40,790
      Property, plant and equipment, at cost, less accumulated depreciation and depletion 9 253,018 247,101
      Other assets, including intangibles, net 16,363 10,332
            Total assets Single Line362,597Double Line Single Line346,196Double Line

You would now know to scroll down to the footnotes to find out more information about accounting policies such as the methods used for depreciation and depletion, and details such as R&D expenditures and this breakdown of Investments:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Investments, Advances, and Long-Term Receivables
Description Dec. 31, 2019 Dec. 31, 2018
(millions of dollars)
Subcategory, Equity method company investments and advances
     Investments 29,291 26,382
     Advances 8,542 8,608
            Total equity method company investments and advances Single line
37,833
Single line
34,990
Equity securities carried at fair value and other investments at adjusted cost basis 190 210
Long-term receivables and miscellaneous, net of reserves of $5,643 million and $5,471 million 5,141 5,590
            Total Single line
43,164Double line
Single line
40,790Double line

 

You can now recognize the term “equity method” and you may also make the connection that the “reserves” mentioned in connection with long-term receivables is an allowance for uncollectible accounts, and “net” means that allowance has been subtracted from the “gross” amount which would be the maturity value of all the notes.

In other words, as you continue to explore these accounting concepts, more and more layers of the financial statement onion are being peeled back, and you are gaining more and more context with which to understand the layers to come.