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Financial Statement analysis

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Attached is Cisco 10k for FY05

Q1. P. 71 - What is the potential impact of Warranties on Cisco's FY05 statements - Warranties are a part of their Cost of Sales. I.E. Cisco should have stated gross margins of x higher than expected because they had an allowance of $411m for Warranties and only used $236m?
I need some help here.

Q2. What effect does Fin 46 (r) p.89 and p.90 have on Cisco Systems balace sheet, Income statement etc.

Q3. Please look at the disaggregagtion of the ROE (attached) please tell me what you think that this means for Cisco - simple papragraph.

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Q1: According to the note in the financial statements, the amount that is provided for warranty liabilities is an estimate, because it is not known with certainty what the exact warranty expense will be. The issue with any item that is estimated is whether or not the company severely under or over estimated the amount. The reason that a company would be interested in over estimating the amount is so that they could reduce their net income and thus reduce their tax liability. Conversely, if they were to under estimate the liability, they may be interested in doing so because they are trying to show investors that they are being more successful than they really are.

Q2: First some background on Fin 46 (r)

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities," which addresses consolidation by business enterprises of VIEs that either: (1) do not have sufficient equity investment at risk to permit the entity to finance its activities without additional ...

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