Spielgeist Games is a video gaming corporation that develops a wide range of video games for...

  

Transcribed Image Text:

Spielgeist Games is a video gaming corporation that develops a wide range of video games for computers and smartphones, with purchases made through its online store. Revenues in the industry have consistently grown by more than 10% per year, and it is not uncommon for companies to post net profit margins of over 15%. Money has been pouring into the industry as investors anticipate that mergers and acquisitions will result in a few large firms using their financial strength to solidify their positions. Over the last five years, Spielgeist has acquired two smaller businesses in the game development industry and integrated their highly talented staff into the Spielgeist corporation. Spielgeist is also exploring the idea of merging with a video streaming business and consolidating their services. Fully merging the two systems would be a very costly and time consuming process, but it could result in them being able to offer a subscription to the widest range of movies, TV shows, and games of any firm in the industry. Interest rates in the economy are still below their historical averages, so management is keen to take advantage of the cheaper borrowing costs while they still can. Selected financial info from Spielgeist Games' final accounts for 2018; balance sheet info as at 31 Dec., 2018. All numbers are in thousands of dollars. By 31 Dec 2013, the initial cost of other fixed assets was $ 1 070 000. Other fixed assets Goodwill Cash Debtors Stock Creditors Other current liabilities Long term liabilities Share capital Accumulated retained profit Revenue Cost of goods sold Expenses Interest Tax Net profit after interest and tax Dividends Opening stock X 1,890,000 4,700,000 623,000 260,000 113,000 1,480,000 1,361,000 3,000 5,051,000 4,950,000 1,322,000 2,595,000 45,000 60,000 928,000 300,000 220,000 Questions 1. Calculate X. Show all your workings. 2. Construct a balance sheet using the above information. 3. Construct a profit and loss account using the above information. 4. Analyze a limitation of the income statement and apply it to the case study. 5. Analyze a limitation of the balance sheet and apply it to the case study. (3) (6) (5) (3) (3) Spielgeist Games is a video gaming corporation that develops a wide range of video games for computers and smartphones, with purchases made through its online store. Revenues in the industry have consistently grown by more than 10% per year, and it is not uncommon for companies to post net profit margins of over 15%. Money has been pouring into the industry as investors anticipate that mergers and acquisitions will result in a few large firms using their financial strength to solidify their positions. Over the last five years, Spielgeist has acquired two smaller businesses in the game development industry and integrated their highly talented staff into the Spielgeist corporation. Spielgeist is also exploring the idea of merging with a video streaming business and consolidating their services. Fully merging the two systems would be a very costly and time consuming process, but it could result in them being able to offer a subscription to the widest range of movies, TV shows, and games of any firm in the industry. Interest rates in the economy are still below their historical averages, so management is keen to take advantage of the cheaper borrowing costs while they still can. Selected financial info from Spielgeist Games' final accounts for 2018; balance sheet info as at 31 Dec., 2018. All numbers are in thousands of dollars. By 31 Dec 2013, the initial cost of other fixed assets was $ 1 070 000. Other fixed assets Goodwill Cash Debtors Stock Creditors Other current liabilities Long term liabilities Share capital Accumulated retained profit Revenue Cost of goods sold Expenses Interest Tax Net profit after interest and tax Dividends Opening stock X 1,890,000 4,700,000 623,000 260,000 113,000 1,480,000 1,361,000 3,000 5,051,000 4,950,000 1,322,000 2,595,000 45,000 60,000 928,000 300,000 220,000 Questions 1. Calculate X. Show all your workings. 2. Construct a balance sheet using the above information. 3. Construct a profit and loss account using the above information. 4. Analyze a limitation of the income statement and apply it to the case study. 5. Analyze a limitation of the balance sheet and apply it to the case study. (3) (6) (5) (3) (3)

Answer rating: 100% (QA)

To calculate the value of X which represents the Other fixed assets on the balance sheet we will use ... View the full answer