Worldwide Corporation reported the following income statement for 2005.

Required Answer each of the following questions.

A. For 2005, calculate the gross profit on product sales and on service sales. Why are these shown separately?

B. What is a “provision for restructuring”? What is a “discontinued segment”? Why is it that the restructuring provision is part of operating income, but the discontinued segment is not?

C. Some businesses show interest expense in a separate section with a title like “Other Revenues and Expenses,” below Income from Operations. Would Worldwide’s operating income have been positive in the years presented if it did not include interest expense?

D. Why is “income taxes” a positive number, not an expense?

E. What is a “cumulative effect of change in accounting principle”?

F. Which would be of more use in attempting to predict the financial future of the company: income from continuing operations or the final net income numbers, including the discontinued operations and the effect of the change in accounting principle?

G. Why are the effects of the discontinued segment and the change in accounting principle presented net of any tax effect?

This exercise will enable you to analyze business strategies and practice examining the progress a firm is making in executing its strategic plan. Singapore Airlines utilizes excellent strategic management as showcased at the beginning. Instructions Step 1 Go to Singapore Airlines’ website. Find the About Us section, which is usually on the bottom left-hand corner of the home page, and then click on Investor Relations. Step 2 Review Singapore Airlines’ most recent quarterly report or half-year report. Step 3 Examine the change in performance variables and statistics for that most recent quarter or half-year report. Step 4 Based on your observations, what are strategic changes you think were made during that time period? What additional changes in your view are still needed? Do the statistics and numbers reveal any key problem areas? How well do you think the company is faring using the strategic management processes they currently have in place?