Period 4 Quiz-Fixed Asset Calculations

Period 4 Quiz-Fixed Asset Calculations

Christy Company operates in the entertainment industry.  In June 2013, Christy purchased Matt’s Movies which produces and distributes various video products.  The purchase resulted in $2.7 million in goodwill.  Since then, Christy has undertaken a number of business acquisitions and diversifications as the company expands.  Selected date from a recent annual report are as follows: ((dollars in thousands)

 

Property, Plant & Equipment and Intangibles  Balance Sheet	Current Year	Prior Year
Film cost (net of amortization)	$1,272	$  991
Artists’ Contracts and other Entertainment Assets	761	645
Property, Plant & Equipment (net)	2,733	2,559
Excess of Cost over Fair Value of Assets Acquired	3,076	3,355
Accumulated Depreciation on Property, Plant & Equipment	1,178	1,023
Income Statement
Total Revenue	9,714	10,644
Statement of Cash Flows
Income from Operations	880	445
Adjustments
Depreciation	289	265
Amortization	208	190
Other Adjustments	-1,618	-256
Net Cash provided by Operations	-241	644

 

Required

 

1. Compute the cost of the property, plant and equipment at the end of the current year.  Explain your answer.
2. What was the approximate age of the property, plant and equipment at the end of the current year?
3. Compute the fixed asset turnover ratio for the current year. Explain your results.
4. What is the “excess cost over fair value of assets acquired”?
5. On the consolidated statement of cash flows, why are the depreciation and amortization amounts added to income from continuing operations?