Use Newell Brands, Inc.'s financial statements to answer to the following questions. According to the footnotes, what was the initial total acquisition cost of the Property, Plant, and Equipment that Newell Brands owns as of December 31, 2020? $ _________________ According to the footnotes, what is the total acquisition cost of Land that Newell Brands owns as of December 31, 2020? $ _________________ According to the footnotes, which of the following methods does Newell Brands use to depreciate its Property, Plant, and Equipment? (Circle one) Straight-Line Double-Declining-Balance Units-of-Activity Provide the 2020 adjusting journal entry (both accounts and amounts) that Newell Brands made to record depreciation on its Property and Equipment. Assume that Newell Brands makes one adjusting journal entry for depreciation expense at the end of each fiscal year as part of its adjusting entries. Does Newell Brands’ Goodwill footnote suggest that the company acquired any other companies during fiscal 2020? (Circle one) YES NO Does Newell Brands’ Goodwill footnote suggest that the company acquired any other companies during fiscal 2019? (Circle one) YES NO Provide the 2020 adjusting journal entry (both accounts and amounts) that Newell Brands made to record amortization on its finite-lived Intangible Assets. Assume that Newell Brands makes one adjusting journal entry for amortization expense at the end of each fiscal year as part of its adjusting entries. Newell Brands, Inc. Financial Statements (partial) Consolidated Balance Sheets In millions of dollars ASSETS As of Dec 31, 2020 As of Dec 31, 2019 Cash and cash equivalents $ 981 $ 349 Accounts receivable, net 1,678 1,842 Inventories 1,638 1,606 Prepaid expenses and other current assets 331 313 Total current assets $ 4,628 $ 4,110 Property, plant, and equipment, net 1,176 1,155 Goodwill 3,553 3,709 Other long-term assets 5,343 6,668 Total assets $ 14,700 $ 15,642 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 1,526 $ 1,102 Wages payable 236 204 Current portion of long-term debt 466 332 Other current liabilities 1,393 1,340 Total current liabilities 3,621 2,978 Long-term debt 5,141 5,391 Other noncurrent liabilities 2,038 2,277 Total liabilities 10,800 10,646 Common stock 3,448 4,447 Retained earnings 452 549 Total stockholders' equity 3,900 4,996 Total liabilities and stockholders' equity $ 14,700 $ 15,642 Notes to Consolidated Financial Statements (partial) Footnote 1. Summary Of Significant Accounting Policies 6. Property, Plant, and Equipment Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are expensed as incurred. Depreciation expense is calculated principally on the straight-line basis. Useful lives determined by the Company are as follows: buildings and improvements (20 – 40 years) and machinery and equipment (3 – 15 years). Depreciation expense was $200 million, and $254 million in 2020, and 2019, respectively. The following table summarizes property and equipment (in millions): As of December 31, 2020 2019 Land $ 86 $ 86 Buildings and improvements 664 641 Machinery and equipment 2,314 2,151 Total property, plant and equipment 3,064 2,878 Accumulated depreciation (1,888) (1,723) Property, plant and equipment, net $ 1,176 $ 1,155 7. Goodwill and Intangible Assets angible asset is below its carrying amount. The following table reflects goodwill activity for fiscal 2020 and 2019 (in millions): Goodwill balance as of December 31, 2018 $ 3,874 Acquisitions 0 Other (165) Goodwill balance as of December 31, 2019 $ 3,709 Acquisitions 0 Other (156) Goodwill balance as of December 31, 2020 $ 3,553 Total amortization expense for intangible assets subject to amortization was $157 million and $192 million in 2020 and 2019, respectively.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Use Newell Brands, Inc.'s financial statements to answer to the following questions.
- According to the footnotes, what was the initial total acquisition cost of the Property, Plant, and Equipment that Newell Brands owns as of December 31, 2020?
$ _________________
- According to the footnotes, what is the total acquisition cost of Land that Newell Brands owns as of December 31, 2020?
$ _________________
- According to the footnotes, which of the following methods does Newell Brands use to
depreciate its Property, Plant, and Equipment? (Circle one)
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Straight-Line |
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Double-Declining-Balance |
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Units-of-Activity |
- Provide the 2020 adjusting
journal entry (both accounts and amounts) that Newell Brands made to record depreciation on its Property and Equipment. Assume that Newell Brands makes one adjusting journal entry for depreciation expense at the end of each fiscal year as part of itsadjusting entries .
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- Does Newell Brands’
Goodwill footnote suggest that the company acquired any other companies during fiscal 2020? (Circle one)
YES NO
- Does Newell Brands’ Goodwill footnote suggest that the company acquired any other companies during fiscal 2019? (Circle one)
YES NO
- Provide the 2020 adjusting journal entry (both accounts and amounts) that Newell Brands made to record amortization on its finite-lived Intangible Assets. Assume that Newell Brands makes one adjusting journal entry for amortization expense at the end of each fiscal year as part of its adjusting entries.
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Newell Brands, Inc. Financial Statements (partial)
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Consolidated Balance Sheets In millions of dollars |
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ASSETS |
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As of Dec 31, 2020 |
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As of Dec 31, 2019 |
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Cash and cash equivalents |
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$ 981 |
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$ 349 |
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Accounts receivable, net |
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1,678 |
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1,842 |
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Inventories |
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1,638 |
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1,606 |
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Prepaid expenses and other current assets |
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331 |
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313 |
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Total current assets |
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$ 4,628 |
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$ 4,110 |
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Property, plant, and equipment, net |
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1,176 |
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1,155 |
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Goodwill |
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3,553 |
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3,709 |
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Other long-term assets |
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5,343 |
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6,668 |
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Total assets |
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$ 14,700 |
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$ 15,642 |
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LIABILITIES AND |
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Accounts payable |
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$ 1,526 |
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$ 1,102 |
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Wages payable |
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236 |
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204 |
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Current portion of long-term debt |
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466 |
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332 |
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Other current liabilities |
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1,393 |
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1,340 |
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Total current liabilities |
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3,621 |
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2,978 |
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Long-term debt |
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5,141 |
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5,391 |
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Other noncurrent liabilities |
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2,038 |
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2,277 |
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Total liabilities |
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10,800 |
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10,646 |
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Common stock |
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3,448 |
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4,447 |
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452 |
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549 |
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Total stockholders' equity |
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3,900 |
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4,996 |
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Total liabilities and stockholders' equity |
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$ 14,700 |
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$ 15,642 |
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Notes to Consolidated Financial Statements (partial) Footnote 1. Summary Of Significant Accounting Policies
6. Property, Plant, and Equipment Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are expensed as incurred. Depreciation expense is calculated principally on the straight-line basis. Useful lives determined by the Company are as follows: buildings and improvements (20 – 40 years) and machinery and equipment (3 – 15 years). Depreciation expense was $200 million, and $254 million in 2020, and 2019, respectively.
The following table summarizes property and equipment (in millions): |
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As of December 31, |
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2020 |
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2019 |
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Land |
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$ 86 |
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$ 86 |
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Buildings and improvements |
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664 |
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641 |
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Machinery and equipment |
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2,314 |
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2,151 |
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Total property, plant and equipment |
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3,064 |
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2,878 |
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(1,888) |
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(1,723) |
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Property, plant and equipment, net |
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$ 1,176 |
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$ 1,155 |
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7. Goodwill and Intangible Assets angible asset is below its carrying amount.
The following table reflects goodwill activity for fiscal 2020 and 2019 (in millions):
Goodwill balance as of December 31, 2018 $ 3,874 Acquisitions 0 Other (165) Goodwill balance as of December 31, 2019 $ 3,709 Acquisitions 0 Other (156) Goodwill balance as of December 31, 2020 $ 3,553
Total amortization expense for intangible assets subject to amortization was $157 million and $192 million in 2020 and 2019, respectively. |
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