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Support Home BUS5601:1-Financial Accounting ASSIGNMENT NAVIGATION 1 Finish attempt ... Chapter 7 Question 1 Incomplete answer Points out of 4.00 Flag question Homework Problem 7.33 Intangible Assets: Deferred Subscriber Acquisition Costs The ADT Corporation provides electronic security, interactive home and business automation, and related monitoring services in the United States and Canada. Clients typically lease the monitoring system and ADT retains ownership of the security system. The company reports: \"For transactions in which the Company retains ownership of the security system asset, referred to as subscriber system assets, non-refundable fees (referred to as deferred subscriber acquisition revenue) received in connection with the initiation of a monitoring contract, along with associated direct and incremental selling costs (referred to as deferred subscriber acquisition costs), are deferred and amortized over the estimated life of the customer relationship.\" Selected information from ADT's 2012 annual report is presented below: THE ADT CORPORATION Consolidated Balance Sheets As of September 28, 2012 and September 30, 2011 (in millions) 2012 2011 Deferred subscriber acquisition costs, net $464 $417 Total assets 9,260 8,739 THE ADT CORPORATION Consolidated Statement of Operations For the Years Ended September 28, 2012 and September 30, 2011 (in millions) Support George Amoah Revenue 2012 2011 $3,228 $3,110 Cost of revenue 1,374 1,341 Selling, general, and administrative expenses 1,125 1,076 7 0 722 693 1 1 (93) (90) 630 604 Income tax expense (236) (228) Net income $394 $376 Other operating expenses Operating income Interest income Interest expense Income before taxes THE ADT CORPORATION Consolidated Statement of Cash Flows For the Years Ended September 28, 2012 and September 30, 2011 2012 2011 $394 $376 111 102 Deferred subscriber acquisition costs (147) (131) Net cash provided by operating activities 1,493 1,439 (in millions) Cash flows from operating activities: Net income Amortization of deferred subscriber acquisition costs Required 1. How much did ADT record as the expenditure of cash for deferred subscriber acquisition costs in 2012? $ 0 million 2. How much would the company's total assets be at September 28, 2012, if the company had always expensed its subscriber acquisition costs? $ 0 million 3. If ADT had always expensed its expenditures for subscriber acquisition costs in its financial statements to shareholders, would the cash flow from operations be higher, the same, or lower? Why? 4. What would the company's income before income taxes be in 2012 if ADT had always expensed its expenditures for subscriber acquisition costs? $ 0 million Next Copyright 2015 MyBusinessCourse / Cambridge Business Publishers , All Rights Reserved | Terms of Use | Privacy Policy | Return Policy