Obtain an annual report from a publicly traded corporation that is interesting t
ID: 2590111 • Letter: O
Question
Obtain an annual report from a publicly traded corporation that is interesting to you. Be sure the company has property and equipment, intangible assets, and long-term debt on its balance sheet. Using techniques you have learned in the previous weeks, respond to the following questions. Just Google - "Netflix 2016 Annual Report" and you can download it for the below questions.
1. What is the amount of property and equipment on the balance sheet for the two most recent years? What is the amount of accumulated depreciation and the depreciation expense? What amounts are on the cash flow statement for the most recent year that relate to depreciation, gains and sales of property and equipment, and purchases and sale of property of equipment? What amounts are permitted for inclusion in the capitalized cost of property and equipment?
2. Looking at the footnote disclosures of the company, what are the individual components of property and equipment? For example, what are the amounts for land, building, equipment, accumulated depreciation, and so forth? How do companies account for non-monetary exchange and dispositions of property and equipment?
3. Does the company have intangible assets? If so, what are the types of intangible assets (patent, copyrights, etc.) and their amounts? What is the amount of accumulated amortization and amortization expense? What amounts on the most recent cash flow statement relate to the purchase and sale of intangible assets? How do intangible assets differ from property and equipment? What costs do we include in intangible assets?
Explanation / Answer
1. Amount of property, plant and equipment (in thousands) in 2016 was 250,395 and in 2015 was 173,412.
Accumulated depreciation for 2016 (in thousands) was 294,209 and for 2015 was 297,346. Depreciation amount (in thousands) for 2016 was 57,528 and for 2015 was 62,283. Depreciation amount provided (except for accumulated depreciation) includes amortization of intangibles as well. This is the amount that is mentioned in the cash flow statement as well.
The cash flow statement shows an amount of 107,653 (thousands) for 2016 and 91,248 for 2015 for purchase of property and equipment. There are no proceeds from sale of property and equipment.
The entire amount of purchase of property and plant is capitalized.
2. The individual components are provided below:
For the year 2016 there was no non-monetary exchange and/or disposition of property, plant and equipment (PPE) and as such no accounting information is given regarding the same.
3. Yes, the company does have intangible assets. The type of intangible assets that the company has is “content assets”. This includes licensed content, produced content and DVD content. The amounts are provided below:
The company does not separately provide amortization expenses for intangibles. It is included in the depreciation amount provided in “1” above.
In the cash flow statement there is acquisition of DVD content assets for 77,177 (in thousands) in 2016 and for 77,958 (in thousands) in 2015.
Intangible assets are different from property, plant and equipment in the sense that such assets are not physical assets unlike property or equipment. For intangible assets the costs that are included are based on the economic benefit generated by them. Netflix, for instance, determines the cost of its streaming content on the basis of the fixed fee that it charges.
2016 2015 I.T. assets 185,345.00 194,054.00 Furniture and fixtures 32,185.00 30,914.00 Building 40,681.00 40,681.00 Leasehold improvements 107,945.00 107,793.00 DVD operations equipment 70,152.00 88,471.00 Capital W-I-P 108,296.00 8,845.00 Gross PPE 544,604.00 470,758.00 Less: accumulated depreciation 294,209.00 297,346.00 Net PPE 250,395.00 173,412.00Related Questions
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