\ Claply tw: the Babnse sheet, y-palonce sheets if is a stetemont of Rrmcinl Position Ha Prom provid a volueble info about te buriness. ve neck To Undursta nck te. accourt> jn the stutoment | the Gabence Sheet Shows Hee. frnumeinl Con dileb oP the npn sen a particle date. fie Heieed aa Seen Se ome (assis ae hae Hee Pim gues te outsiders (binpilitier) aml te in lernel owners (stock helden's fe) eae Belence sheet rest babncetic Assets wilh the Liabilitio wale holders p24) Asis 2 inbibetan + stocWholden's peat Consobedetel Presa statement + Ee Consobideteh Pinmncud stcewnerts overtie combinal one af a fort capins acl. 163 subsulames: Ty were? Oe agyegk. of Separate: Rey nf enitit io the stale Lotiers Can Pond Ett con Felidatel Cos more. loeneficiel te memure The euk overall positioned ke IR GRRE Wier rra esc dete etna Gl when a parent owns more Ham Sof of he voting steel of a subsiding He Proncinf = lemeTs owe. Com Dinarl in a. Con | Lijlotad One» ae Paebree huge: Bis > prepered at point in time. ad the endl. off 0m acemuntncy period. ws a year, fer, month for he quater sh 9 enelicn gimoseh, june3e 7 SEP 30: pe Confers toe BEE it to Lmittcl value to the one accor period f Pinsncéd sebewent! Ber there would be no reforense point Cfor delormining changer tn Genne (Ramee eels ema. 2o8 Be ore aig ak Renst 2 peedelil statements will orm/ole tHe users To wenger, terol af He Pinercind position Q«2/5 F FASB, sec + TAS do net precribe te format af B/s. ce cerurtly prepare clanified B/S. Tras, Aree ahi Dibenne class: Pick infoce Key seclons Pov Assets, inclate most assets Hen Piped OSSHs. 00, current AaeD —° renggtole Birak assets Uren wrengibie Sixert assets Ber Liable lear, Firstly by by Uavred Uabilthien mt Then now Current Lielohetise es vy # onan site BIG: Tew the Proess Of atenber Ge Prnanciad s\akeme cB/s). a Behe oe cee comparison of Firms with diferent Revelr of sxloo or wit onpthy worry (oer denominator. Cin, sh in ewer te te vend and Compare Porencied tnforratitn ap the bo» rows. Lt > useful te evabuske pronto ace within Pre pirenia dash GD Emmitt 2.2 In Be poo Kk, Pepe Ke Assets: Me Off sidect He sheet. | ee Thin Ue (907) ave Assets = Liabi beter 4 stock holders ce) Assets eve Eisteh in order of decrensing Ray yy He mosh Riga asc ove Untol fe ie = Curent Rsvelss Bpribk 2.5 ane wok page 5% pe converte into Canb wi Hin ke vas ly Legad or sie 6 one yor re one petting the operates me ¥ the time te parchare gee eS fhe pro av ey ie oe ham" vefers te thoie assets, Thal on’ combina amd. vestocKed in the ong) operstions of he Omir.EXHIBIT 2.1 Sage Inc. Consolidated Balance Sheets at December 31, 2078 nd 2015 Gin Thouranas Eguaipanone| Lintlinon and Stackheere ity srognnoiaore ay a “Tora Liabilities art Srocknaeione” Equity Sse Eee EXHIBIT 2.2 sage inc. Common-size Balance sheets (Percent)— Cash anol (owen Epeivalerito : ) TH ty the Cash auton deposit gx or in Abad account. wheke Cork \puive ave short term Highty Logucl investment Ternch into 22 with paler iDies af 3 montis bop» money merit ford, ieee) pill one Commer cet Peper jew wp cash equiv ss - Markibable seceerten|m5) S i Tt in short-term Ren RNS ere Manly Lh investments in debt securition Tut canbe ¥ Ly Conver lel into Cook ok egal SORT) per oy nce In eye Coen rege or sold p Br siketons Ht neck” ack 307 PRY = Accounts Recewine: i ow evekk salts - Gre. tanlomer walonces ot St net va larble value (re achuebomourt if in reported onthe B/s ? af the account Leh om ablow amet forderot fet account 3° Hore, Tho monomers mat Opneee Dee! On keene ta Shee Pee ore expect SLL BE Umcettectnie Gllection pols EE amount the Alm > tel taser He ablowence reco Movence toy dowel ¢ 442 eae a ers aes 44d Account 5/R qut) B1b° GaletVE = 497 o 448 . ¥ I Hate srovid be oc consised yelttonstin Fre B)e pnerenioay gales a pblovenrce necomrt oferwise |, he het ove He possicle. reron> foy We abrovmaR pattern? 5 ek: inthe ook” pat 95 — Enver Lo the tkem(s) heb for sale ov fo de sel in Phe production Ohak will be sold. (iorot momufecToring compainir) Hay hold only G Some. Comp ory rar Chin dine inventories ey nly for resol) +Ohhey companion (Menvefacfinnna ConRanien) » woud! eacrs treed da Mero Types of HF inventor} <= Se ie Endhet %00do service -ovienfed companies have Weer wo inienlo%y tompaval with. Monufacioving teeter bm 5 eo You con compare Biw # b/s op Service Compton) ~ Omethe i pe acl are Go wht 2 Hoe Inventory Accounting meio do * the method of ce) chosen Sy a company t5 Hee account Tyventon termion’> te value of Peer he expenses rego ies ica for COGS U in about the presente of inflation ont 5 implication on the Tox popmert the inventory Vilaxhontae veoet eniine. Flow of 9p do - there’ core. Ruree test FR assumptions | FiFo eae ox) Lopp (Lest vn Firstont: = Fife: He Pavst wats Perclased aie the ist sold. eH re ps ) Sie cae " ee Te \y avenge _ Average Cosh: owerng © perclare price bo dekrmine te cost af Product sold. - @: Assume pio iea thre of Pere Uomo at Be enol of pew. #l aaa wee TREE RODS Ke Bi BS aL RS #3 x5, BANS er, Kt ey at cosehetless x34 Tost af wih HS S = Qu)— So, wite tee in flaloon neresioy prices the LIFO Methart > ef Jeoselk (COGS) eapensecay produces He highent cot nvewor) (12) i put lowest oy valance of F but Pero has Re epposit fet inflation) , LIFO produces Che Levgest CoGs when prices ore rising (' jetaction, tre (over He tataie expense —> tte — = expense Sneome 50, pf we we LIPO ithe olering Hee inflaton per ot Prepat bepenses! uch os Mguronety Paik in odstomce - Tes, wi Kom Yours Proper 1 Plat + Epuip ment : ub Company's poe ge Wat procue ceonomic beni pormore Hhom oneyenr» since They Rae. mplysteal suo stone, Uy oe ens dena ble onde” » Inte Bs , PPC plant a ope which o he-dfperent b/ orginal cost done ea) accu wlohe hep veceabion ade: dn of depreceatzon :@ shroighk-Lme metiod © occeterstid. metbech. of experre te pw ll vebace the — vost, properly tenes + wlilisn owe sometimes Lewd De Counted om CA + He expive pment io shown at bool valine there > 2 mele Ap strnight=Gne meltok aLlocoltr on ometnt Oe he “depreciation period te eyo cttad. ; ablocele er omounks of expenre te the eavliw @ ae Sis oleprecable n (ek besser oments 10 Ke later Yeas put the total pneu of dup recittion over the asseks Gife > Same pegpraliy ef Hae cleo straight line | Aecebenteak Goo00x (1402, pee = 2908 deprecinolers = [ooge ees © Ssh FB cisGoodwill: od will arises When one Compond ac pusres (4) another Comps miialde fares pte Por o price. up the Pah manlcl value of ret identifiable onsets Ldentipible arse ps bess liabi Phin orhamed- f Liabilde _; Current Linbdlitier year on one operetiog oye. are the short-term cbérqation s that = Accounts payable (AP. A/P UL imerenses 4 decreaned up To arise: Prom cvenit by) suppres te ereal. policy of Mae five : are those thet must BC sits Pek iw one eee bebe oe notes Poyebie) Consist of short-form Debt: (yebened te a? obliyooons in Be forse of promimory neler spre suppliers cad ingibutions olwe in One Yeor or Len. or Pinon = currents mutiny of i) term pebt: Th in the portion of the perm primcipahy that wo be Yepach datas ee wp CON, EO Phe LTD x Acc red Linprhetion ‘ If» the Liab chitin theh vetteck the |expenre> tet Lewe. wot yet tke bap lkenis been paid duriny om accous perio: 52° wee ne eee ond SS event eohok® Plo (acervat)} ~ unewrnch Rete OF defer: COAT: 5 Js the Imon ve cewek by an indivi or comp: ve Service Se, tt” bao ck to be phy + the te Blew har 0. Cinbibi fo the vevinuee Cavredl. eorihe unlil 5 deboery df the a ‘or SNViCe>*ppernd Tox ove the venlt of ii rages by vecogut ton revere + EXperre ae Hane income, velotme to yoporbek intome ue Know, Cet Some Companie? pallor the sagt Loe wethocl emt others follow He acceRevahed fe Mepipe fp report ind, pleted Phe ocTnek an primer ine Revenant iccoereiy recat 250900 dpeeee p lo0,000 for He paz Parposeet. ett 4 + 9ORNO for Pinonc yepev Wh, 34K 2 lhe tok vere. Lomonhey [ot fatmrey Por Rey For Reports Reveme. Fea 0 Expert 324-928), ors jyeooe | 209207 | eg elas | Tax expe 5loe2) (6420) sangre A cr Nekinom 99,000 132 000 3 Buea a defer “Tak Rabbis,

eae | see exompla Page: & | Lon, Term Oebt (LTD): Ti 2 obtinghion fore such o>: Long Horm nolo pryable - Convertable debt toghel- Phan one yeor maluwrifion Bee Loom — bork paysble—FIGURE 2.2 Deferred Taxes—An Example A company purchases a piece of equipment for $30,000. The equipment is expected to last three years and have ‘no salvage value atthe end of the three-year period. Straight-line depreciation is used for financial reporting purposes and an accelerated method is used for tax purposes. The following table shows the amounts oF ‘depreciation that would be recorded for both sts of hooks over the three-year life ofthe equipment: Deprectation expense Depreciation expense Year (Financial reporting) (Tax seporting) 1 $10,000 $20,000 p) 10.000 $6667 3 $10,000 $3333 Asoume that revenues are $90,000 and all expenses other than depreciation are §20,000 each year, the tax rate 4s 30%, and depreciation isthe only temporary difference that creates the deferred tax account. Caleulations to determine tax expense for reporting purposes and tax paid are below: Year| Income Statement Tax Return Revenues $90,000 $90,000 Expenses: Depreciation (10,000) (20,000) Other 0.00) 20.000) earnings before taxes san007 Taxable income SOOT Tax rate x 030 Tax expense F500 F,00 “The recording of taxes atthe end of year 1 will involve a decreas inthe eash account of $15,000, an increase in tax expense of $18,000;and an increase inthe deferred tax liability account of the eiference, $3,000, Year? Income Statement Tax Return Revenues $90,000 $90,000 (20,000) (6.667) 20.00) (20.000) Earnings before taxes Sonor Taxable income $65,353 Tax rate 0,30 030 S00 Tax expeme x ‘The recording of taxes atthe end of year? will involve a decrease in the cash account of $19,000; an increase in tax expense of $18,000: nd a decrease in the deferred tax liability account ofthe difference, $1,000, The deferred tax liability aecount will now have a balance of $2,000 atthe end of year? Yeur3 Tocome Statement ‘Tax Rewun Revenues 90.0 990,000 Expenses Depreciation 10.000) Gan) Other (20,000) (20,000) Enrnings before taxes smo Taxable income $60,567 Taxrate 030 030 “Tax expense Simon Soow The recording of taxes at the end of year 3 will involve a decrease inthe eash account of $2,000; an increase in tx expense of 18,00; an a deereaein the defered tax haility account of the difference, $2,000. The deferred tax ability account will now havea balance of $0 atthe end of year 3, a the temporary difference has completely reversed. ‘Notie thatthe total amount ofincome tax expense ($54,000) recorded for reporting purposes s exactly ‘equal to the tx pad ($54.00) over te three-year period,pik ace de es oe 0 “pecctiene Bee eee Gl pee) poem Oe eae ere OY GEE ole cies Fie ones fopsend. feesthe ent is Pensions ot pak Ae Veuvek Smploee depinek Cork compen ge & ee yenefis pln ave F stock Rotrers YY ay pees an aterest Iwiesteral tasty errs apa detnctey the inpiitin - the owenes in Uhr care bear th Diqhest vis armen 51600: oe yecewe a Pixel return bit oto have votiny Privebegeo proportion te ownerstip infevest Additional pr in captel: Yp Te actlition pail CPLEE Canty burt Vy Unance op tee 5 locks » ied Pamda pC rar ebeclel to reinvest in the | ee of 5 eT Ode vather Unim: Poy out te sTectchollen, fn chirerlende ‘ RE= NT- Dividendo referred Stott Corrie & fixe om 2 wets 0 diwiden payment but no Yorn COMMON STOCK Total Shares Retained Stockholders’ (000) Amount Earnings Equity Balances, December 31, 2007 50,000 $130.0 $750.0 $880.0 2008 Net Income 175 Cash Dividends 6.575) Addition to Retained Earnings $600 $600 Balances, December 31, 2008 ‘50,000 130.0 $8100 5940.0