5,220,000 Fixed Assets and Intangible Assets

Chapter 9 Fixed Assets and Intangible Assets

441 a. Compute the book value of the fixed assets for the current year and the preceding year and explain the differences, if any. b. Would you normally expect Apple’s book value of fixed assets to increase or decrease during the year? EX 9-22 Balance sheet presentation OBJ. 6 List the errors you find in the following partial balance sheet: Burnt Red Company Balance Sheet December 31, 2014 Assets Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000 Replacement Cost Accumulated Depreciation Book Value Property, plant, and equipment: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 50,000 200,000 Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 160,000 290,000 Factory equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 375,000 140,000 235,000 Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000 60,000 65,000 Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000 — 90,000 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 10,000 50,000 Total property, plant, and equipment . . . . . . . . 1,350,000 420,000 930,000 EX 9-23 Fixed asset turnover ratio OBJ. 7 Verizon Communications is a major telecommunications company in the United States. Two recent balance sheets for Verizon disclosed the following information regarding fixed assets: Year 2 in millions Year 1 in millions Plant, property, and equipment 211,655 229,743 Less accumulated depreciation 123,944 137,758 87,711 91,985 Verizon’s revenue for Year 2 was 106,565 million. Assume the fixed asset turnover for the telecommunications industry averages approximately 1.10. a. Determine Verizon’s fixed asset turnover ratio for Year 2. Round to two decimal places. b. Interpret Verizon’s fixed asset turnover ratio. EX 9-24 Fixed asset turnover ratio OBJ. 7 The following table shows the revenue and average net fixed assets in millions for a recent fiscal year for Best Buy and RadioShack : Revenue Average net Fixed Assets Best Buy 50,272 3,947 RadioShack 4,473 278 a. Compute the fixed asset turnover for each company. Round to two decimal places. b. Which company uses its fixed assets more efficiently? Explain. Appendix EX 9-25 Asset traded for similar asset A printing press priced at a fair market value of 275,000 is acquired in a transaction that has commercial substance by trading in a similar press and paying cash for the difference between the trade-in allowance and the price of the new press. a. 185,000 Continued Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook andor eChapters. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.