Case Analysis: In terms of classification, emission allowances satisfy the definition of an intangible asset. Specifically, they are assets (not including financial assets) that lack physical substance. [FASB, Appendix F, Glossary to SFAS 142, Goodwill and Other Intangible Assets]. Although they have some similarities to financial assets, they do not satisfy the definition of a financial asset. Although they are potentially used in an entity’s operations, they are not inventory. An emission allowance
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Chapter 7 Consolidated Financial Statements - Ownership Patterns and Income Taxes Chapter Outline I. Indirect subsidiary control A. Control of subsidiary companies within a business combination is often of an indirect nature; one subsidiary possesses the stock of another rather than the parent having direct ownership. 1. These ownership patterns may be developed specifically to enhance control or for organizational purposes. 2. Such ownership patterns may also result
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E9-1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011. 1. Paid $5,000 of accrued taxes at time plant site was acquired. 2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. 3. Paid $850 sales taxes on new delivery truck. 4. Paid $17,500 for parking lots and driveways on new plant site. 5. Paid $250 to have company name and advertising slogan painted on new delivery
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1/. What do you understand by the term Depreciation, Depletion and Amortization? 2/. Give two examples of assets that each of the above terms is applicable 3/. Define the term Trial Balance and give two advantages and disadvantages of it. Depreciation: Is a reduction in the value of tangible fixed assets. It also refers to an expense recorded to allocate a tangible asset’s cost over its life. Because it is a non-cash expense, it increases free cash flow while decreasing reported earnings
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assets. c) Depreciation and amortization was: 2009: $17,862,000, 2008: $17,036,000 2007: $15,859,000. d) Tootsie Roll’s purchases of property, plant, and equipment were: 2009: $20,831,000, 2008: $34,355,000. e) Tootsie Roll intangible assets are goodwill and trademarks with indefinite lives and they are not amortized, rather tested for impairment at least annually. The test is performed by comparing the carrying value of the asset with its estimated fair value, calculated using estimates including
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Allowances $30,000. 2. Exercise BE9-13. Correct. Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows: buildings $1,100,000; accumulated depreciation-buildings $650,000; goodwill $410,000; coal mine $500,000; accumulated depletion-coal mine $108,000. Complete the partial balance sheet of Spain Company for these items. (List assets with smallest net book value first. Enter all amounts as positive amounts and subtract where
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Music Mart. Inc., became no longer responsible for this half. 7. Smith received a bona fide offer of $33,000 for the business; although his equity was then only $26,970, he rejected the offer. It was evident that the store had already acquired goodwill of $6,030. 8. Smith withdrew $1,000 cash from the store’s bank
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VALUATION OF GOODWILL WHAT IS GOODWILL? The value of a business is not always defined by what assets it owns and what it owes. A successful business will develop customer loyalty and an overall positive reputation in its community, which will cause its market value to be greater than its book value. A company may also generate a higher value if it proves over time that it can generate superior revenues than its competition through managerial expertise, its reputation within its business sector
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Dear Mr. Gabriel, In response to your inquiry regarding potential adjustments to the carrying value of your corporation’s tangible assets for possible impairments in value and also for possible impairment of value of the Goodwill booked on the corporation’s Balance Sheet, I have researched and concluded the following information and proper disclosures for XYZ Corporation. Tangible Assets Let’s begin with the tangible assets of the corporation. Over the useful life of the asset, it is necessary
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Rachel Hartong Professor Johnson ACCT 301 Research Paper Nov. 30, 2011 The Development of Goodwill Impairment and Its Current Effects The business world of the 20th and 21st centuries is one that has become more and more susceptible to mergers and acquisitions. As a result of the industrial revolution, and the more recent technological revolution, some firms were, and continue to be, able to gain the competitive advantage over competitors, leading to their acquisition (Hughes 16). With the increase
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