Purpose: To help familiarize you with the financial reporting of a real company to further your understanding of the chapter material you are learning. This case addresses the long-term assets of Bombardier Inc. The majority of these assets consist of tangible assets and intangible assets. In the text, you learned how most long-term tangible assets used in business are capitalized and depreciated over their estimated useful lives. Further, you learned that certain intangible assets are amortized over time while others are not. In this case, you will not only see and understand the classification and presentation of these assets, but also explore the methods used by Bombardier Inc. to depreciate and amortize them. Refer to Bombardier Inc.’s financial statements in My Accounting Lab. Also consider the information presented in Note 7, under the heading Property, Plant, and Equipment, and in Note 8 titled intangible assets.
Requirements
1. What were the balances of Property, Plant, and Equipment on January 31, 2011 and January 31, 2010? Did the amount of ending Property, Plant, and Equipment increase or decrease? Assume Bombardier Inc. removed fully depreciated equipment having a cost of $357 (million) in 2011. What effect would this have on the value of the Property, Plant, and Equipment balance? Explain your answer.
2. What kinds of tangible assets does Bombardier Inc. have? What kinds of intangible assets does Bombardier Inc. have? Which intangible assets are amortized by Bombardier Inc. and which are not? Why?
3. What was the percentage of tangible assets compared to the total assets on January 31, 2011? What was the percentage of tangible assets compared to the total assets on January 31, 2010? Did the percentage increase or decrease during the year?
4. What depreciation policies does the Bombardier use for its Property, Plant, and Equipment? How much amortization was expensed during the year related to its property, plant, and equipment?
5. For the intangible assets, how much was acquired from third parties and how much was internally generated during 2011?