Campbell Soup

Case 3-2: analyzing and interpreting liabilities

1. Identify major types of liabilities. Which liabilities require recognition of interest

expense

Liabilities are debts owed to vendors. The major types of liabilities are current and non-

current liabilities. Under current liabilities we have accounts payable, principle and interest

payable, short-term loans, taxes payable, accrued expenses, and unearned revenue (Girsch-

Bock, M., 2022). Under long-term liabilities we have, notes payable, mortgage payable,

bonds payable, deferred tax liabilities, and capital leases (Girsch-Bock, M., 2022). Campbell

Soup’s major liabilities are notes payable, accrued liabilities, dividends payable, accrued

income taxes and long-term debt. Interest expense represents interest payable on amounts

borrowed like bonds, loans, convertible debt (Kagan, J., 2022). It is calculated as interest rate

times outstanding principal debt amount. The notes payable and long-term debt require

recognition of interest expense. This is because interest payments need to be made for the

period the debt has been outstanding, thus creating an accruing interest that in turn creates an

expense and liability.

2. Reconcile activity in the long-term borrowing account for Year 11. Long-

term borrowing account

Retirement of 13.99% notes (187):159.7, Repayment of 9.125% note:.3,

Additional borrowing of 7.5% note:.1, Borrowing on 9% note:99.8, Borrowing on medium-

term note:100.0, Borrowing on 8.875% debentures note:199.6, Repayment of other note:24.3,

Reclassification of note:250.3, Increase in capital lease obligation.

3. Describe composition of long-term liabilities account using note 19

Using note 19, the composition of Campbell’s long-term liabilities account is made of long-

term notes having a fixed rate. The debentures owed also show a fixed rate too. It is a clear
indication that the company does not need derivatives to mitigate future uncertainties that

might affect the interest rate. The long-term debt maturity is break-down is as follows $227.7

for year 2012, $118.9 for year 2013, $17.8 for year 2014, $15.9 for year 2015, $108.3 for

year 2016, and $511.7 from year 2017 and beyond.

Case 3-3: analyzing and interpreting equity

Refer to annual report in appendix A

1. Determine book values per share of common stock for year 11

Book value per share= stockholder’s equity/ total number of outstanding common shares

Shareholders’ equity= total assets- total liabilities

Total liabilities= 1278.0+ 772.6+ 305.0 = 2,355.6

Shareholders’ equity= 4149- 2355.6 = 1,793,400

Total Outstanding shares = 127,003,765* $15 = $1,905,056,475

Book value per share = 1,793,400/ 1,905,056,475 = 9.41

2. Identify the par value of common shares. Determine the number of common

shares authorized, issued, and outstanding at the end of year 11

a. Par value; $15 (140,000,000*15= $2,100,000,000

b. Shares Authorized; 140,000,000 shares

c. Shares Issued; 135,622,676 shares

d. Outstanding shares (issued shares- treasury stock)

= 135,622,676- 8,618,911 = 127,003,765 shares outstanding

 3. Determine how many common shares were repurchased as treasury stock for

year 11. Determine the price at which Campbell repurchased the shares (year 11

repurchase price, $51.72)

Repurchase price= (outstanding shares × current market price) ÷ (outstanding number of

shares – number of repurchased shares)

As per note 11; Campbell repurchased approximately 3.4 million shares of its capital stock at

$175.6 million.
 References

Girsch-Bock, M. (August 5, 2022). 11 Common Types of Liabilities. The Ascent. A motely

Fool Service.

https://www.fool.com/the-ascent/small-business/accounting/articles/types-of-

liabilities/

Kagan, J. (May 5, 2022). Interest Expense. Investopedia.

https://www.investopedia.com/terms/i/interestexpense.asp