Question

In: Accounting

Below is note to the financial statements number 15 extracted from the 2016 annual report for...

Below is note to the financial statements number 15 extracted from the 2016 annual report for BOC Kenya Limited.

Required:

(a) What is meant by (i) amortization, (ii) accumulated amortization?

(b) What are intangible assets?

(c) Where are intangible assets listed on the balance sheet?

Cost

At beginning of year

Reallocation to property plant and equipment (Note 14)

Additions

Translation differences

Group

Company

2016              2015

2016             2015

16,299        22,544

16,061       22,544

      -                (6,220)

-                       (6,483)

      561                -

      561                 -

              (25)

                 -

At end of year

16,860          16,299

16,622       16,061

Accumulated amortisation

At beginning of year

Reallocation to property, plant & equipment (Note 14)

Charge for the year

At end of year

(15,629)     (18,982)

(15,537   (18,982)

      -                4,644

-                    4,566

       (534)        (1,291)

     (454)   (1,211)

(16,163)       (15,629)

15,991     (15,537)

Net carrying amount at 31 December

       697              670  

      631            524

Solutions

Expert Solution

A)--i and ii--=Accumulated amortization is the total sum of amortization expense recorded for an intangible asset. In other words, it’s the amount of costs that have been allocated to the asset over its useful life.

A lot of people confuse amortization with depreciation. Although both are similar concepts, depreciation is used for physical assets like fixed assets whereas amortization is used for intangible assets like patents.

Both Fixed assets and intangible assets are capitalized when they are purchased and reported on the balance sheet. No costs are initially recorded on their purchase dates. Instead, the assets’ costs are recognized ratably over the course of their useful life. This cost allocation method agrees with the matching principle since costs are recognized in the time period that the help produce revenues.

B)--=An intangible asset is an asset that is not physical in nature. Corporate intellectual property, including items such as patents, trademarks, copyrights and business methodologies, are intangible assets, as are goodwill and brand recognition. Intangible assets exist in opposition to tangible assets which include land, vehicles, equipment, inventory, stocks, bonds and cash.

An intangible asset can be classified as either indefinite or definite. A company brand name is an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, the agreement has a limited life and is classified as a definite asset.

C)--=Accumulated amortisation

At beginning of year


Related Solutions

3. Below is financial information extracted from financial statements for KHLED Inc. for 2016. items Amounts...
3. Below is financial information extracted from financial statements for KHLED Inc. for 2016. items Amounts in thousands of Saudi Riyal Net in come 200 Depreciation expense 15 Increase in accounts receivable 35 Decrease in inventory 30 Increase in accounts payable 20 Proceeds from sale of land 50 Purchases of equipment 20 Proceeds from issuance of common stock 40 Cash dividends 5 Cash, January 1, 2016 100 Required: Prepare cash flow statement for KHALED Inc. for 2016 using the indirect...
The following information was extracted from Mathis Corporation's 2016 annual report: Common stock Shares outstanding 12/31/15...
The following information was extracted from Mathis Corporation's 2016 annual report: Common stock Shares outstanding 12/31/15 90 million New shares issued 04/01/16 10 million Shares outstanding 12/31/16 100 million Preferred stock $10 par, 10%, convertible into 2 shares of common stock, shares outstanding 50 million Options 1 million options, each to purchase one common share at $50 per share Market price of stock Average for year $75 Beginning of year $70 End of year $78 Preferred dividends paid $50,000,000 Net...
Presented below are financial data from ECI’s 2016 annual report. Your job is to take this...
Presented below are financial data from ECI’s 2016 annual report. Your job is to take this information and put together a cash flow statement. Balance Sheet Data 12/31/2016 12/31/2015 Cash 102,500 45,000 Net Accts Receivable 28,000 35,000 Inventories 270,000 200,000 Land 43,000 35,000 Plant Assets, Gross 274,000 260,000 Accumulated Depreciation 82,000 75,000 Accounts Payable 50,000 64,000 Wages Payable 6,000 1,000 ST Notes Payable 3,000 10,000 Dividends Payable 3,000 2,000 LT Bonds Payable 107,000 90,000 Common Stock 200,000 170,000 APIC-CS 207,000...
Ambrose Inc. published the following financial statements in its 2016 annual report Income statement For the...
Ambrose Inc. published the following financial statements in its 2016 annual report Income statement For the year ending December 31, 2016 sales $500,000 Cost of goods sold 350000    Gross profit 150,000 Operating expenses $75,000 Depreciation 20,000 95,000 EBIT   55,000 ? Interest expense 20,000 EBT 35,000 ? Tax Expense 12,250 EAT   22,750 Dividends 10,000 Addition to retained earnings$ 12,750 Sales in 2017 are estimated to be $650,000. Forecast the 2017 income statement, balance sheet, and statement of cash flow assuming:...
To analyze the financial statements of a publicly traded company Obtain an annual report from a...
To analyze the financial statements of a publicly traded company Obtain an annual report from a publicly traded corporation that is interesting to you. Be sure the company’s financial statements include deferred taxes, postretirement benefits, dilutive securities, and share-based compensation. Using techniques you have learned in the previous weeks, respond to the following questions. PICK ANY COMPANY and obtain a report What amount of deferred tax assets or deferred tax liabilities are on the two most recent years on the...
(i) The following information is extracted from the financial statements of XERO
(i) The following information is extracted from the financial statements of XEROLimited:Cash $677,423 Accounts Payable $1,721,669Accounts Receivable $1,845,113 Notes Payable $2,113,345Inventories $1,312,478Total Current Assets $3,835,014 Total Current Liabilities $3,835,014Net Sales $9,912,332Cost $5,947,399 (a) Briefly explain what you understand by the term ‘operating cycle’. (1 mark)Click or tap here to enter text. (b) What is the operating cycle for XERO Limited? Click or tap here to enter text. (c) What can you say about XERO Limited’s accounts receivable and inventorymanagement if...
Locate the audited financial statements in the 2019 Walmart Annual Report and 2019 Target Annual Report....
Locate the audited financial statements in the 2019 Walmart Annual Report and 2019 Target Annual Report. Perform the following ratios: Current, Quick, A/R Turnover/Inventory Turnover/Debt to Equity, times interest earned, gross profit, profit margin, return on assets, return on sales
Annual Report Assignment: Select an annual report, review the financial statements and related notes and answer...
Annual Report Assignment: Select an annual report, review the financial statements and related notes and answer the following questions. 1.Name of Company 2.Describe the company you have selected and identify the company type, i.e. Service firm, merchandiser, manufacturer, etc. 3.What is the company’s year-end and was it profitable in the most recent fiscal year? 4.Based on your review of the financial statements and the related notes to the financial statements were all of your questions about the company answered? Would...
The following information was extracted from the 2020 financial statements of Arigato LLC:
The following information was extracted from the 2020 financial statements of Arigato LLC:Income from continuing operations before income tax           $755,123Selling and administrative expenses                                            480,357Income from continuing operations                                            495,951Gross profit                                                                                           1,357,530The amount reported for Other Revenue/Gains and Other Expenses/Losses is: $  Blank 1. Fill in the blank, read surrounding text.Use “-“ sign for negative amount, as needed. Use commas, as needed.
The following financial information was extracted from MCL’s current draft financial statements and those of the...
The following financial information was extracted from MCL’s current draft financial statements and those of the previous year:​ 2017 ($M) 2016 ($M) 2015 ($M) Revenue 220 260 240 Total assets 260 280 250 Net Profit before tax 19 (3) 17 The car parts and accessories industry has been very competitive and consumer demand appears to be slowing in anticipation of change with electric and driverless cars coming into the market. The company has recently restructured its operations to outsource its...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT