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?
