Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 12, Problem 1FSC
Financial Statement Analysis Case 1: Long-Lived Asset Impairments
BlackBerry Limited, the smartphone manufacturer reported a $2,748 million impairment loss on its income statement during the year ended March 1, 2014. You are interested in further examining this and any other impairment losses at BlackBerry and have identified the financial statement excerpts on the following pages to further analyze. Refer to these financial statements excerpts and Exhibit 12.2 in the text to answer the following questions:
Required
- a. What types of long-lived assets does BlackBerry report? What is the dollar amount and percent change m total and by each type of long-lived asset from March 2, 2013, to March 1, 2014? What are long-lived assets in total and by type as a percent of total assets at March 1, 2014, and March 2, 2013?
- b. What is the total amount of impairment losses BlackBerry reported in the years ended March 1, 2014, March 2, 2013, and March 3, 2012? To what types of assets do the impairment losses relate?
- c. What is the amount of impairment losses on intangible assets that BlackBerry reported for the years ended March 1, 2014, March 2, 2013, and March 3, 2012? To what type of intangible asset do the losses relate?
- d. Compute the percent change in operating income for all years. What would the percent change in operating income be excluding the impairment losses? Comment on how the inclusion or exclusion of impairment losses affects the percentage change in operating income and the trend in operating income.
| BlackBerry Limited Incorporated under the Laws of Ontario (United States dollars, in millions) | ||
| At | ||
| March 1, 2014 | March 2, 2013 | |
| Assets | ||
| Current | ||
| Cash and cash equivalents | $1,579 | $ 1,549 |
| Short-term investments | 950 | 1,105 |
| 972 | 2,353 | |
| Other receivables | 152 | 272 |
| Inventories | 244 | 603 |
| Income taxes receivable | 373 | 597 |
| Other current assets | 505 | 469 |
| 73 | 139 | |
| Assets held for sale | 209 | 354 |
| 5,057 | 7,441 | |
| Long-term investments | 129 | 221 |
| Property, plant and equipment, net | 942 | 2,073 |
| Intangible assets, net | 1,424 | 3,430 |
| $7,552 | $13,165 | |
| BlackBerry Limited (United States dollars, in millions, except per share data) Consolidated Statements of Operations | |||
| For theYear Ended | |||
| March 1, 2014 | March 2, 2013 | March 3, 2012 | |
| Revenue | |||
| Hardware and other | $3,880 | $ 6,902 | $14,031 |
| Service and software | 2,933 | 4,171 | 4,392 |
| 6,813 | 11,073 | 18,423 | |
| Cost of sales | |||
| Hardware and other | 6,383 | 7,060 | 11,217 |
| Service and software | 473 | 579 | 631 |
| 6,856 | 7,639 | 11,848 | |
| Gross margin | (43) | 3,434 | 6,575 |
| Operating expenses | |||
| Research and development | 1,286 | 1,509 | 1,556 |
| Selling, marketing and administration | 2,103 | 2,111 | 2,600 |
| Amortization | 606 | 714 | 567 |
| Impairment of long lived assets | 2,748 | – | – |
| Impairment of |
– | 335 | 355 |
| Debentures fair value adjustment | 377 | – | – |
| 7,120 | 4,669 | 5,078 | |
| Operating income (loss) | $(7,163) | $(1,235) | $ 1,497 |
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Chapter 12 Solutions
Intermediate Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
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