Financial Accounting: An Integrated Statements Approach, 2nd Edition

List the errors you find in the following partial balance sheet:

The following are recent excerpts from the financial statements of Sirius Satellite Radio Inc., a

company delivering national satellite audio entertainment services:

Balance Sheet—Property, Equipment, and Intangible Assets (in millions)

Satellite system $ 945.5

Terrestrial repeater network 72.0

Broadcast studio equipment 28.9

Furniture and fixtures 41.3

Other 69.9

Construction in progress 4.7

Property and equipment, gross $1,162.3

Accumulated depreciation (281.0)

Property and equipment, net $ 881.3

FCC license 83.7

Total property, equipment, and intangible assets $ 965.0

Depreciation Expense—Income Statement $ 95.4

a. Estimate the average useful lives of depreciable property and equipment, assuming

straight-line depreciation and no residual value. Round to the nearest year.

b. Estimate the percent of remaining life of depreciable property and equipment, assuming

straight-line depreciation and no residual value. Round to one decimal place.

c. Sirius reports no amortization expense associated with the FCC (Federal Communication

Commission) license. Why is this?

The following financial statement note information was provided for two recent comparative

years for Johnson & Johnson, one of the world’s most comprehensive health-care products

companies. Patents are a significant asset for Johnson & Johnson; thus, accumulated amortiza-

tion information is provided in the notes to provide users additional disclosure beyond what is

generally required.

Jan. 2, 2005 Dec. 28, 2003

(in millions) (in millions)

Patents $3,974 $3,798

Accumulated amortization (1,125) (818)

Patents, net $2,849 $2,980

428 Chapter 9 Fixed Assets and Intangible Assets

Assets

Total current assets $597,500

Replacement Accumulated Book

Cost Depreciation Value

Property, plant, and equipment:

Land $ 100,000 $ 20,000 $ 80,000

Buildings 260,000 76,000 184,000

Factory equipment 550,000 292,000 258,000

Office equipment 120,000 80,000 40,000

Patents 80,000 — 80,000

Goodwill 45,000 5,000 40,000

Total property, plant, and equipment $1,155,000 $473,000 $682,000

Kraftmaid Company

Balance Sheet

December 31, 2007

Exercise 9-25

Balance sheet presentation

Goal 4

Exercise 9-26

Balance sheet presentation

and analysis

Goals4, 5

Exercise 9-27

Intangible assets and balance

sheet presentation

Goals4, 5