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Income Statement and Balance Sheet Reformulatio n

Income Statement and Balance Sheet Reformulatio n. Southwest and AirTran Acquisition. On May 2, 2011, Southwest acquired all of the outstanding equity of AirTran Holdings, Inc . whose parent company was AirTran Airways

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Income Statement and Balance Sheet Reformulatio n

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  1. Income Statement and Balance Sheet Reformulation
  2. Southwest and AirTran Acquisition On May 2, 2011, Southwest acquired all of the outstanding equity of AirTran Holdings, Inc. whose parent company was AirTran Airways Note 1: Summary of Significant Accounting Policies states the accompanying Consolidated Financial Statements for 2011 include the results of operations and cash flows for AirTran from May 2, 2011 through December 31, 2011
  3. Combined Year-end 2010 Balance Sheet for Southwest and AirTran for comparability to 2011 and 2012
  4. Net Enterprise Assets Uncertain about Restricted Cash and Air Traffic Liability Not typical line items Will have to dig deeper into the financial statement Notes in order to classify as enterprise operations or financing activities
  5. Net Financial Liabilities Issues with Deposits held by counterparties to derivative financial instruments and Short Term and Long Term Derivative Financial Instruments Could be hedging instruments so they would be categorized as enterprise operations Uncertain about Current Portion of Capital Leases and Capital Leases and whether to treat that as debt financing or like an asset in enterprise operations for the airline business
  6. Common Stockholder’s Equity
  7. In the year 2010, I combined Southwest and AirTran’s Year- end Income Statements. For 2011, I combined Southwest’s Year-end Income Statement and 4/3 of each line item of AirTran’s 2011 Q1. This is because Southwest started accounting for AirTran after May 2011, and I used 4/3 of the Q1 numbers in order to estimate April 2011.
  8. Enterprise Profit After Tax Uncertain about Distribution, Other (gains) losses net, and Other net deferred because they are vague terms to further investigate Also uncertain about Acquisition and Integration because that is not Southwest’s main line of business but is an operating expense = (Interest Expense – Interest Income)*.37 + Reported Income Taxes
  9. Financing Expense After Tax = (Interest Expense – Interest Income)*.37 Issues with Other Gain/Loss Derivatives because they might include hedging derivatives which would be classified as enterprise operations
  10. Checking Our Numbers For 2012 CSE = NEA – NFL $6,922 = $7,501 - $509 CI = EPAT – FEAT $526 = $594 - $68
  11. Works Cited Capital IQ SEC website Module 2 from Valuation for Financial and Accounting Professionals
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