MGAB02H3 Chapter Notes - Chapter 9: Intangible Asset, Book Value, Historical Cost

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11 Dec 2013

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Chapter 9: reporting and interpreting property, plant, and equipment; natural resources; and. Long-lived assets: are tangible or intangible resources owned by a business and used in its operations to produce benefits over several years. Fixed asset turnover = net sales / average net fixed assets. Cost must be recorded at their acquisition cost according to cost principle. Special discounts and interest charges should not be included in the cost. Sales taxes, legal fees, transportation costs, and installation costs are added to the purchase price of the asset. Acquisition cost: the net cash equivalent amount paid or to be paid for the asset. Capitalized interest: represents interest on borrowed funds directly attributable to construction until the asset is ready for is intended use. Basket purchase: an acquisition of two or more assets in a single transaction for a single lump sum. Ordinary repairs and maintenance: expenditures for normal operating upkeep of long-lived assets.

Related Questions

1.The useful life of a plant asset is:

The length of time it is used productively in a company'soperations

Never related to its physical life

Its productive life, but not to exceed one year

Determined by the FASB

Determined by law

2. Depreciation:

Measures the decline in market value of an asset

Measures physical deterioration of an asset

Is the process of allocating to expense the cost of a plantasset

Is an outflow of cash from the use of a plant asset

Is applied to land

3. Plant assets are

Tangible assets used in the operation of a business that have auseful life of more than one accounting period

Current assets

Held for sale

Intangible assets used in the operations of a business that havea useful life of more than one accounting period

Tangible assets used in the operation of business that have auseful life of less than one accounting period

4. A company has net sales of $870,000 and average accountsreceivable of $174,000. What is its accounts receivable turnoverfor the period?

0.20

5.00

20.0

73.0

1,825

5. FICA taxes include:

Social Security taxes

Charitable giving

Employee income taxes

Unemployment taxes

6. Times interest earned is calculated by:

Multiplying interest expense times income

Dividing interest expense by income before interest expense

Dividing income before interest expense and any income tax byinterest expense

Dividing interest and income tax expense by income beforeinterest and income tax expense

7. Amortization:

Is the systematic allocation of the cost of an intangible assetto expense over its estimated useful life

Is the process of allocating to expense the cost of a plantasset to the accounting periods benefiting from its use

Is the process of allocating the cost of natural resources toperiods when they are consumed

Is an accelerated form of expensing an asset's cost

Is the same as depletion

8. A method of estimating bad debts expense that involves adetailed examination of outstanding accounts and their length oftime past due is the:

Direct write-off method

Aging of accounts receivable method

Percentage of sales method

Aging of investments method

Percent of accounts receivable method

9. A company purchased a tract of land for its natural resourcesat a cost of $1,500,000. It expects to mine 2,000,000 tons of orefrom this land. The salvage value of the land is expected to be$250,000. The depletion expense per ton of ore is:

$0.75

$0.625

$0.875

$6.00

$8.00

10. The matching principle requires:

That expenses be ignored if their effect on the financialstatements are less important than revenues to the financialstatement user

The use of the direct write-off method for bad debts

The use of the allowance method of accounting for bad debts

That bad debts be disclosed in the financial statements

That bad debts not be written off

11. Liabilities:

Must be certain

Must sometimes be estimated

Must be for a specific amount

Must always have a definite date for payment

Must involve an outflow of cash

12. In the accounting records of a defendant, lawsuits:

Are estimated liabilities

Should always be recorded

Should always be disclosed

Should be recorded if payment for damages is probable and theamount can be reasonably estimated

13. A contingent liability:

Is always of a specific amount

Is a potential obligation that depends on a future event arisingout of a past transaction or event

Is an obligation not requiring future payment

Is an obligation arising from the purchase of goods or serviceson credit

Is an obligation arising from a future event

14. Total asset turnover is calculated by dividing:

Gross profit by average total assets

Average total assets by gross profit

Net sales by average total assets

Average total assets by net sales

Net assets by total assets

15. If the times interest ratio:

Increases, then risk increases

Increases, then risk decreases

Is greater than 1.5, then the company is in default

Is less than 1.5, the company is carrying too little debt

16. Promissory notes that require the issuer to make a series ofpayments consisting of both interest and principal are:

Debentures

Discounted notes

Installment notes

Indentures

Investment notes

17. A company borrowed $300,000 cash from the bank by signing a5-year, 8% installment note. The present value factor for anannuity at 8% for 5 years is 3.9927. Each annuity payment equals$75,137. The present value of the note is:

$75,137

$94,013

$300,000

$375,685

18. A bond traded at 102

burgundypug781

I need 10 Finanical Ratio's and benchmarks see list below forAllscript Health Solutions finiacial data included ratios and anindustry benchmark, and a dashboard (1 page graphicalrepresentation of 5 ratios). The analysis will include at leastthree recommendations on specific action that can be taken by theorganization to improve financial performance.

CONSOLIDATED BALANCE SHEETS -USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec.31,2013
Current assets:
Cash and cash equivalents	$ 116,873	$ 53,173	$62,954
Accounts receivable, net ofallowance of $31,266 and $36,047 as of December 31, 2015 and 2014,respectively	327,851	331,625	313,486
Prepaid expenses and othercurrent assets	93,622	102,392	107,911
Total current assets	538,346	487,190	539,819
Long-term marketablesecurities	0	1,305	1,329
Fixed assets, net	125,617	145,830	174,013
Software development costs,net	85,775	86,153	88,244
Intangible assets, net	347,646	403,362	455,971
Goodwill	1,222,601	1,200,746	1,189,585
Deferred taxes, net	2,298	1,984	7,361
Other assets	359,665	137,760	163,341
Total assets	2,681,948	2,464,330	2,619,662
Current liabilities:
Accounts payable	60,004	70,824	72,956
Accrued expenses	62,021	78,967	96,499
Accrued compensation andbenefits	62,398	51,062	80,196
Deferred revenue	315,925	293,022	251,038
Current maturities oflong-term debt and capital lease obligations	12,609	27,498	16,350
Total current liabilities	512,957	521,373	517,039
Long-term debt	612,405	539,193	545,133
Deferred revenue	20,273	23,168	29,080
Deferred taxes, net	22,164	21,119	79,694
Other liabilities	95,076	75,257	130,572
Total liabilities	$ 1,262,875	$ 1,180,110	$1,301,518
Commitments andcontingencies
Stockholdersâ equity:
Preferred stock: $0.01 parvalue, 1,000 shares authorized, no shares issued and outstanding asof December 31, 2015 and 2014	$ 0	$ 0	$0
Common stock: $0.01 par value,349,000 shares authorized as of December 31, 2015 and 2014; 266,545and 189,308 shares issued and outstanding as of December 31, 2015,respectively; 265,138 and 180,466 shares issued and outstanding asof December 31, 2014, respectively	2,665	2,651	2635
Treasury stock: at cost,77,237 and 84,672 shares as of December 31, 2015 and 2014,respectively	(189,753)	(278,036)	-278,036
Additional paid-incapital	1,789,449	1,749,593	1,716,847
Accumulated deficit	(190,235)	(188,009)	-121556
Accumulated othercomprehensive loss	(4,242)	(1,979)	-1745
Total Allscripts HealthcareSolutions, Inc.'s stockholders' equity	1,407,884	1,284,220	1,318,145
Non-controlling interest	11,189	0	0
Total stockholders'equity	1,419,073	1,284,220	1,318,145
Total liabilities andstockholders' equity	$ 2,681,948	$ 2,464,330	2,619,663

CONSOLIDATEDSTATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenue:
Software delivery, support andmaintenance	$ 918,430	$ 907,343	$ 918,686
Client services	467,963	470,530	454,375
Total revenue	1,386,393	1,377,873	1,373,061
Cost of revenue:
Software delivery, support andmaintenance	291,804	312,898	325,471
Client services	432,038	437,776	427,933
Amortization of softwaredevelopment and acquisition-related assets	81,986	81,215	85,201
Total cost of revenue	805,828	831,889	838,605
Gross profit	580,565	545,984	534,456
Selling, general andadministrative expenses	339,175	358,681	419,599
Research and development	184,791	192,821	199,751
Asset impairment charges	1,544	2,390	11,454
Amortization of intangible andacquisition-related assets	23,172	31,280	31,253
Income (loss) fromoperations	31,883	(39,188)	(127,601)
Interest expense	(31,396)	(29,297)	(28,055)
Other income, net	2,183	766	7,310
Equity in net earnings ofunconsolidated investments	(2,100)	(398)	0
Income (loss) before incometaxes	570	(68,117)	(148,346)
Income tax (provision)benefit	(2,626)	1,664	44,320
Net loss	(2,056)	(66,453)	(104,026)
Less: Net income attributableto non-controlling interest	(170)	0	0
Net loss attributable toAllscripts Healthcare Solutions, Inc. stockholders	$ (2,226)	$ (66,453)	$ (104,026)
Loss per share - basic anddiluted attributable to Allscripts Healthcare Solutions, Inc.stockholders	$ (0.01)	$ (0.37)	$ (0.59)

Capital Structure Ratios
Capitalization ratios


Equity ratio





Capitalization ratio


Fixed asset financingratio


Coverage ratio


Cash flow to toal debt


Debt service coverage


Cash flow coverage


Cushion ratio


Capital expense ratio

redfish597

Exercise 10-2: (Net Position Components) Using the format at the end of this exercise, indicate the impact that each of the following transactions has on the total net position of a proprietary fund and on each net position component. Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in fund net position of a proprietary fund. A sample transaction is analyzed for you. Sample Transaction: Purchase of equipment costing $5,000 with unrestricted cash.

Note as stated in the exercise Also, indicate whether the transaction is reported in the statement of revenues, expenses, and changes in fund net position of a proprietary fund.

1. Sold building with a book value of $150,000 for $225,000 (proceeds not restricted).

2. Land costing $500,000 was purchased by issuing a five-year, 8% note payable for $450,000. The balance was paid from cash restricted for an expansion project.

3. Depreciation expense for the year was $200,000.

4. Interest expense of $36,000 on the note in transaction 2 was paid from unrestricted resources.

5. Bonds payable of $200,000 were repaid from restricted resources, along with $50,000 of interest. The bonds were issued several years earlier to finance capital asset construction.

6. A capital grant of $500,000 was received, but no qualifying costs have been incurred.

7. $300,000 of the restricted capital grant from transaction 6 was expended for its intended purpose.

8. Sales revenues amounted to $1,000,000.

9. Interest revenues restricted to the use of the Enterprise Fund, $40,000, were received.

10. The cost of materials and supplies used for the year was $75,000.

Solution: E10-2

		Net Position
Transaction Number	Affect Operating Statement ($)	Unrestricted ($)	Restricted ($)	Net Investment in Capital Assets ($)	Total ($)
Sample	No	$(5,000)	_	+ $5,000	_

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MGAB02H3 Chapter Notes - Chapter 9: Intangible Asset, Book Value, Historical Cost

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