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For the exclusive use of J. SHEN
UV1117 Rev. Nov. 23, 2008
BERKSHIRE HATHAWAY INC.—INTERCORPORATE INVESTMENTS (A) Company Description Based in Omaha, Nebraska, Berkshire Hathaway Inc. (BH) was a holding company that owned subsidiaries involved in many diverse businesses. The most important of those were property and casualty insurance businesses, although the company owned businesses in other industries as well. Attachments

Exhibit1: Exhibit2: Exhibit 3:
Exhibit 4: Exhibit 5:
Exhibit 6:
Assignment
Consolidatedbalancesheetsfromthe2004annualreport Consolidatedstatementsofearningsfromthe2004annualreport Excerpt from significant accounting policies and practices footnote from the 2004 annual report Excerpt from footnote on investments in fixed maturity securities from the 2004 annual report Footnote on investments in equity securities from the 2004 annual report; excerpt from footnote on investment gains and losses from the 2004 annual report Footnote on investments in MidAmerican Energy Holdings Company from the 2004 annual report Refer to the exhibits regarding intercorporate investments taken from BH’s 2004 annual report to answer the following questions. 1. What criteria does BH use to determine whether to consolidate its investments in This case was prepared by Associate Professor Luann J. Lynch. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2006 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. Rev. 11/08. This document is authorized for use only by Jennifer Shen in ACC 423, Financial Reporting 1, Fall Quarter, 2013 (Prof. Wasley) taught by Prof. Charles Wasley from September 2013 to December 2013. 

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other corporations, account for them using the equity method, or account for them as marketable securities? 2. Refer to the “Insurance and Other” assets section of the balance sheet (Exhibit 1). BH shows investment in fixed maturity securities of $22,846 million and investments in equity securities of $37,717 million on December 31, 2004. What investments comprise the $22,846 million? What investments make up the $37,717 million? Does BH classify those investments as held-to-maturity (HTM), available-for-sale (AFS), or trading securities (TS)? 3. Refer to the “Finance and Financial Products” assets section of the balance sheet (Exhibit 1). BH shows investment in fixed maturity securities of $8,459 million on December 31, 2004. What investments comprise the $8,459 million? Does BH classify those investments as held-to-maturity, available-for-sale, or trading securities? 4. Refer to Exhibit 4 and Exhibit 5. In general, how do the unrealized gains and losses shown in those footnotes affect the balance sheet, income statement, and statement of cash flow? 5. How does BH account for its investment in MidAmerican Energy Holdings Company? Why? This document is authorized for use only by Jennifer Shen in ACC 423, Financial Reporting 1, Fall Quarter, 2013 (Prof. Wasley) taught by Prof. Charles Wasley from September 2013 to December 2013. For the exclusive use of J. SHEN

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Exhibit 1
BERKSHIRE HATHAWAY INC.—INTERCORPORATE INVESTMENTS (A)
Berkshire Hathaway Inc. and Subsidiaries’ Consolidated Balance Sheets (dollars in millions, except per-share amounts) See Exhibits 5 and 6, “Notes to Consolidated Financial Statements.” Source: Berkshire Hathaway Inc. 2004 annual report. This document is authorized for use only by Jennifer Shen in ACC 423, Financial Reporting 1, Fall Quarter, 2013 (Prof. Wasley) taught by Prof. Charles Wasley...
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