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Intel Corp.

Investments

Please use excerpts from the 2007 financial statements of Intel Corp to answer the following
questions.

1. Intel classifies some of its financial securities as trading assets. What is the estimated fair
value of Intel’s trading assets at the end of fiscal year 2007? What is the book value of
these investments at the end of fiscal year 2007?

2. Current accounting rules allow firms to recognize unrealized holding gains on available
for sale securities without affecting Net income. Suppose that Generally Accepted
Accounting Principles instead required firms to recognize all such gains and losses in Net
income.

a. What effect would this alternative accounting treatment have on Intel’s Total
Shareholders’ Equity at the end of fiscal year 2007?

b. What effect would this alternative accounting treatment have on Intel’s Retained
Earnings at the end of fiscal year 2007?

c. What effect would this alternative accounting treatment have on Intel’s Net
income for fiscal year 2007?

3. US-GAAP provides firms with discretion whether to categorize a security as available for
sale or trading security at the point of purchase. Suppose Intel had always classified all its
trading securities as available for sale securities. Assume a tax rate of 35%.

a. What effect would this alternative accounting treatment have on Intel’s Total
Shareholders’ Equity at the end of fiscal year 2007?

b. What effect would this alternative accounting treatment have on Intel’s Retained
Earnings at the end of fiscal year 2007?

c. What effect would this alternative accounting treatment have on Intel’s Net
income for fiscal year 2007?