Christy Company
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?
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Rating:
/5
Solution: Christy Company