Problem 1: The Following Is A List Of Account Titles And Amo

Problem 1the Following Is A List Of Account Titles And Amounts In Mil

Problem 1 the Following Is A List Of Account Titles And Amounts In Mil

Problem 1 The following is a list of account titles and amounts (in millions) from a recent company annual report: Buildings and improvements $182; Goodwill $324; Prepaid expenses $135; Machinery and equipment $521; Allowance for Doubtful Accounts $41; Accumulated Depreciation $382; Other noncurrent assets $248; Inventory $421; Accumulated amortization $800; Other intangibles $1,452; Cash and cash equivalents $710; Accounts receivable $685.

Required: Prepare the asset section of the balance sheet for this company, classifying assets into Current Assets, Property, Plant and Equipment (net), and Other Assets.

Paper For Above instruction

The asset section of a company's balance sheet provides a detailed view of its resources classified into current assets, property, plant, and equipment, and other assets. Based on the provided account titles and amounts, we will classify each as per standard accounting practices.

Current Assets

  • Cash and cash equivalents: $710 million
  • Prepaid expenses: $135 million
  • Accounts receivable: $685 million
  • Inventory: $421 million

Subtotal of Current Assets: $1,951 million.

Property, Plant, and Equipment (Net)

  • Buildings and improvements: $182 million
  • Machinery and equipment: $521 million
  • Less: Accumulated Depreciation: $382 million

Net Property, Plant, and Equipment: ($182 + $521 - $382) = $321 million.

Other Assets

  • Goodwill: $324 million
  • Other noncurrent assets: $248 million
  • Other intangibles: $1,452 million
  • Allowance for Doubtful Accounts: $(41) million (contra-asset; deducted from accounts receivable)

Note: Allowance for Doubtful Accounts is a contra-asset account reducing Accounts receivable; it is not listed separately in assets but considered in net accounts receivable.

Therefore, the total assets are summarized as:

  • Current Assets: $1,951 million
  • Property, Plant, and Equipment (net): $321 million
  • Other Assets: (Goodwill + Other noncurrent assets + Other intangibles) = $324 + $248 + $1,452 = $2,024 million

This classification provides insight into the company's liquidity, long-term investments, and intangible resources.

References

  • Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.
  • Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial Accounting. Wiley.
  • Schneider, G., & Wild, J. J. (2018). Contemporary Financial Accounting. Pearson.
  • Healy, P. M., & Palepu, K. G. (2018). Business Analysis & Valuation: Using Financial Statements. Cengage Learning.
  • Knauer, M. C., & Kranitz, J. P. (2017). Financial Statements Manual. South-Western Publishing.
  • Penman, S. H. (2012). Financial Statement Analysis and Security Valuation. McGraw-Hill Education.
  • Damodaran, A. (2015). Applied Corporate Finance. Wiley.
  • Gibson, C. H. (2013). Financial Reporting and Analysis. Cengage Learning.
  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2014). Financial Statement Analysis. McGraw-Hill Education.
  • Higgins, R. C. (2012). Analysis for Financial Management. McGraw-Hill Education.

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