Question

Analyze property, plant, and equipment transactions from a company’s financial statements

1. P6-56B CrossCanada Transport Inc. (CC) provides warehouse and distribution services. The excerpts that follow are adapted from CC’s financial statements for fiscal year 2017.

   (amounts in thousands)	October 31
   Balance Sheet	2017	2016
   Assets
   Total current assets	$237,936	$208,530
   Premises and equipment	5,941	5,246
   Less Accumulated depreciation	(3,810)	(3,428)
   Goodwill	4,752	4,304

   	For the Year Ended
   	October 31
   Statement of Cash Flows (in millions)	2017	2016
   Cash provided from operating activities:
   Net income from continuing operations	$5,492	$4,757
   Noncash items affecting net income:
   Depreciation	434	405
   Cash used in investing activities:
   Acquisition of premises and equipment	(706)	(511)
   Cash used in acquisitions (including $41 of premises and equipment)	(373)	(256)

Requirements

1. How much was CC’s cost of property and equipment at October 31, 2017? How much was the carrying amount of premises and equipment? Show computations.

2. The financial statements give three pieces of evidence that CC purchased premises and equipment during 2017. What are they?

3. Prepare T-accounts for Premises and Equipment and Accumulated Depreciation. Then show all the activity in these accounts during 2017. Did CC dispose of any assets and, if so, what was the carrying amount?

4. Why has goodwill not been amortized?

Answer 1

Hi Friend,

Please refer to the solution below.