Anаlyzing аnd Interpreting Disclоsures оn Cоntrаct Manufacturers Nike, Inc. (the Company), reports the following information relating to its manufacturing activities in Part 1 of its 2020 10-K report: We are supplied by 122 footwear factories located in 12 countries. Virtually all of our footwear is manufactured outside of the United States by over 15 independent contract manufacturers, which often operate multiple factories. The largest single footwear factory accounted for approximately 9% of total fiscal 2020 NIKE Brand footwear production. For fiscal 2020, contract factories in Vietnam, Indonesia, and China manufactured approximately 50%, 24%, and 22% of total NIKE Brand footwear, respectively. We also have manufacturing agreements with independent contract manufacturers in Argentina and India to manufacture footwear for sale primarily within those countries. For fiscal 2020, four footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 61% of NIKE Brand footwear production. a. What effect does the use of contract manufacturers have on the Company’s balance sheet? The use of contract manufacturers {#1} {#2} from the balance sheet. Sales are {#3}. PPE turnover is {#4}. b. The Company executes purchase contracts with its contract manufacturers to purchase their output. How are executory contracts reported under GAAP? Executory contracts are {#5} under GAAP.