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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear

Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com.

Required:

Refer to the statement of cash flows:

a. What is the amount of depreciation and amortization expense that each company reported for the 3 years presented?

b. How much did each company spend on the acquisition of operating assets (capital expenditures) in each of the last 3 years?

c. Is the change in depreciation and amortization expense consistent with the pattern of capital expenditures observed? Why or why not?

To determine

(a)

Introduction:

Depreciation are the non-cash expense. This expense shown in the debit side of the profit and loss accounts, and reduced form the assets form the balance sheet. Depreciation charged on the tangible assets.

Amortization expense is also like depreciation expense. Amortization charge on the intangible assets like patent, copyright.

To choose:

What is the amount of depreciation and amortization expense that each company reported for the 3 year?

Explanation

Under the Columbia Sportwear

Deprecation and amortization expense

Cash flow statement

Particular 2016 2015 2014
Depreciation and amortization

United States

LAAP

EMEA

Canada

Unallocated corporate expense

Total

24,920

6,392

3,189

2,912

22,603

60,016

25,490

5,437

2,419

3,020

20,155

56,521

25,736

4,750

2,550

3,463

17,518

54,017

This is the data of the Under Armour, Inc...

To determine

(b)

Introduction:

Acquisition of operating assets means company increase the capacity of production, its means company is ongoing increase the operating profit. So, that company make huge expense on acquiring the assets.

To choose:

How much did each company spend on the acquisition of operating assets?

To determine

(c)

Introduction:

Amortization and deterioration are techniques for customizing the expense of business assets through the span of their valuable life. Amortization. Amortization is a technique for spreading the expense of an immaterial asset over a particular timeframe, which is typically the course of its helpful life.

To discuss:

Is the change in depreciation and amortization expense consistent with the pattern of capital expenditure observed? Why or why not?

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