1. A company bought a machine on July 1, 2009, for $50,000. At that date, it was estimated to have a useful life of five years and a residual value of $5,000 at the end of its useful life. On December 31, 2012, the company sold the machine for $25,000. How will this sale be accounted for in the company's financial statements?

2. Robert Kaplan and David Norton (2004) state that "intangible assets almost never create value by themselves." The value of intangible assets is strong only if the intangible assets support the strategy the company is pursuing. For example, consider McDonald's, which pursues a low-cost strategy. Staff training and knowledge related to process improvements (such as just-in-time [JIT] inventory management and total quality management [TQM]) will be valuable for a company like McDonald's, since this intangible resource supports the overall strategy of cost leadership.

Describe an example of an intangible asset that might be valuable to each of the following companies:

1. Dell Computers
2. Canadian Tire
3. Lululemon Athletica (a high-quality athletic clothing company)
4. Walmart
5. Tim Hortons
6. Research In Motion

Answer rating: 100% (QA)

1 Accounting for the Sale of the Machine The sale of the machine will be accounted for as follows Calculate the book value of the machine at the date ... View the full answer