To help familiarize you with the financial reporting of a real company in order to further your

Question:

To help familiarize you with the financial reporting of a real company in order to further your understanding of the chapter material you are learning.

This case addresses the long-term assets of Columbia Sportswear. The majority of these assets consist of property and equipment and intangible assets. In the text, you learned how most long-term tangible assets used in business are capitalized and depreciated over their estimated useful lives. Further, you learned that certain intangible assets are amortized over time, whereas others are not. In this case, you will not only recognize and understand the classification and presentation of these assets, but also explore the methods used by Columbia Sportswear to depreciate and amortize them.

Refer to Columbia Sportswear’s financial statements in Appendix A. Also, consider the information presented in footnote 2, under the headings Property, plant, and equipment and intangible assets and goodwill; footnote 7, titled Property, Plant, and Equipment, Net; and footnote 8, titled intangible assets, Net and Goodwill.


Requirements

1. What was the balance of net property, plant, and equipment on December 31, 2016? What was the balance of net property, plant, and equipment on December 31, 2015? Did the amount of ending net property, plant, and equipment increase or decrease? Assume Columbia Sportswear removed $436,000 of fully depreciated assets from fixed assets in 2016. What effect did this have on the value of the net property, plant, and equipment balance? Explain your answer.

2. What methods of depreciation were used by Columbia Sportswear? What were the estimated useful lives of the assets? What kinds of intangible assets does Columbia Sportswear have? Which intangible assets are amortized by Columbia Sportswear, and which are not? Why?

3. What was the proportion of net property, plant, and equipment compared with the total assets on December 31, 2016? What was the proportion of net property, plant, and equipment compared with the total assets on December 31, 2015? Did the proportion increase or decrease during the year?

4. Columbia Sportswear lists “Leasehold improvements” and “Construction in progress” as part of Property, Plant, and Equipment. Although these assets are not discussed in the textbook, can you describe what these assets might represent?

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Financial Accounting

ISBN: 978-0134727790

5th edition

Authors: Robert Kemp, Jeffrey Waybright

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