accounting help! will give SB to fellow monkeys!!!!
HI monkeys,
i am in need of your help~~
i attached the picture of my question..
please follow the red lines for question 1, and blue lines for question 2...
image here: http://i47.tinypic.com/nd671f.jpg
thanks!!!!!!!!!
will give out many silver bananas
Look at the A/A of "Streaming" between 2010 and 2011. It increased by less than 500K, while the CF shows 700K for 2011 amortization.
With regards to DVDs, take a look at Acquisition of content (85K), Total content lib in 2010 (627K), and Total content lib in 2011 (599K). Now look at the Amortization in 2011 - 97K. Difference between amortization and investment is about 12K, doesn't explain it all, but might give you a start in terms of hunting for clues.
Good luck
Red: Right now the assumption you're making is that the depreciation expense incurred in a year = the change in accumulated depreciation between two years on the balance sheet. Think about what must be true for that to happen. Hint: it's about fixed asset movement: within a year a company can (1) purchase fixed assets, (2) dispose / sell fixed assets, or (3) both. Notice the logic fallacy yet?
Blue: Look at your current comparison between the two years on the balance sheet. What's weird about your comparison figures? Hint: for (1), you're using the cost of the DVDs, but for (2), you're using the cost of the DVDs less amortization, given there's no current content library for both years. When you understand this, think again about the potential movement of DVDs within a year. To do a mini-test for your understanding, try figuring out how much the company has disposed in DVDs between the two years. You have enough info in your picture to figure this out.
Hopefully this helps more than giving you the answers
hi quattro, thanks for your answer.. let me just see if i got this correct
red: because the cash flow amortization was 795K, and the accumulated amortization between 2011-2010 was 477K. it means the company disposed of some assets during the year such that on the balance sheet the accumulated amortization is smaller than cash flow amortization.. so the logic is they disposed of these assets that were supposed to be amortized such that they can record less accumulated amortization on the balance sheet.. is this correct?
blue: I see what you mean now.. so the change in gross amount is 27K, and the acquisition of DVD library was 85K... which means the company disposed around ~112K of DVD library assets during the year.. is this correct?
LOL at the SBs on the sheet.
+1 to quattro. you're ignoring disposals.
.
Quattro is on track about additional stock movements, other than the linear "easier to spot" you have on the sheet. These may include e.g. sales/disposals and write-offs/downs. Depending on treatment and disclosure they could be a point to consider for red issue.
Also your logic on blue is hard to follow, as you take the FY gross amount less the PY net amount, which is affected by the acc. amortisation. Try PY Total Gross + investments = FY Total gross + (NET other movements, as per above). Same for acc. amortisation (as movements also need to be account for corresponding amortisation). This can help you spot any other movements (perhaps on the notes).
Hope this helps.
thanks for the clue monkeys, i will start looking at those things and figure out whats going on!!
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