The purpose of this mini case is to provide you with a deeper understanding of long-lived assets.You will continue using the company you selected for mini case 1.Please submit your mini case on Canvas and include your company’s name on the document that you submit.
Required:
1. Briefly discuss the impact of any recent accounting pronouncements on long-lived assets. You can find this information in the footnotes(e.g., Recent Accounting Pronouncements).
2. Note if the company changed the way it accounts for depreciation and/or amortization. You can find this information in a footnote on significant accounting policies, one of the first few footnotes in most companies’ 10-Ks.
3. Review the Management Discussion and Analysis (MD&A) section and briefly note any discussion related to long-lived assets.
4. List the amounts of the company’s fixed assets and intangible assets for the last three years. Note that many firms report an asset called right-of-use assets, which are related to capitalized operating leases and are technically intangible assets. Given their nature, you can ignore them for this mini case.
a. What is the percentage of fixed assets and intangible assets to total assets? Briefly comment on the importance of these accounts to the company’s total assets.
b. What do the results from (a) suggest about the company’s strategy for generating revenues?
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5. What depreciation/amortization method(s) does your company use for its long-lived assets? This information is usually available in the discussion of significant accounting policies and/or the footnotes. Managerial Accounting Assignment Help
6. Does your company report any asset impairments for long-lived assets over the past three years?You can usually find information about long-lived asset impairments in the footnotes.
a. If so, note the amount of the impairment and the percentage of operating earnings before the impairment and comment on its impact on future operating income.
7. If the company provided a reason for the impairment, note that reason (this should be disclosed!).
8. Calculate asset turnover ratios for the past three years and explain why they changed.
a. Verify the calculation of Total Asset Turnover (compare to D&B Business Browser)
i. Compare the ratio to its industry benchmark and comment on differences.
b. Calculate Fixed Asset Turnover(benchmark data not available on D&B Business Browser)
c. Calculate Intangible Asset Turnover(benchmark data not available on D&B Business Browser)
d. Comment on the trend in fixed asset turnover and intangible asset turnover and the differences between them.
9. What is the percentage of years remaining and the number of years remaining for fixed assets and intangible assets for the last three years? Firms should disclose depreciation and amortization expense in the footnotes. If your company doesn’t do so, then you can obtain this data from the Statement of Cash Flows.
Note: Some companies do not have amortizable intangibles. If this is the case with your company, then you will not be able to do this analysis for intangibles. Please note this in your write-up.
10. Comment on the sufficiency of fixed assets (PP&E) and intangible assets to sustain sales growth. Integrate your analyses from above, as appropriate, into your answer. Managerial Accounting Assignment Help
