Question

Karl Company operates in both the beverage and entertainment industries. In June 2013, Karl purchased Good Time, Inc., which produces and distributes motion picture, television, and home video products and recorded music; publishes books; and operates theme parks and retail stores. The purchase resulted in $2.7 billion in goodwill. Since 2013, Karl has undertaken a number of business acquisitions and divestitures (sales of businesses) as the company expands into the entertainment industry. Selected data from a recent annual report are as follows (amounts are in U.S. dollars in millions):


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 “excess of 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 continuingoperations?


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  • CreatedJuly 01, 2014
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