ACC 291 week 2 question

SoccerBoss
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Accounting
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Question description

The financial statements of Tootsie Roll are presented below.

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data)
For the year ended December 31,
201120102009
Net product sales$528,369$517,149$495,592
Rental and royalty revenue4,1364,2993,739
Total revenue532,505521,448499,331
Product cost of goods sold365,225349,334319,775
Rental and royalty cost1,0381,088852
Total costs366,263350,422320,627
Product gross margin163,144167,815175,817
Rental and royalty gross margin3,0983,2112,887
Total gross margin166,242171,026178,704
Selling, marketing and administrative expenses108,276106,316103,755
Impairment charges14,000
Earnings from operations57,96664,71060,949
Other income (expense), net2,9468,3582,100
Earnings before income taxes60,91273,06863,049
Provision for income taxes16,97420,0059,892
Net earnings$43,938$53,063$53,157
Net earnings$43,938$53,063$53,157
Other comprehensive earnings (loss)(8,740)1,1832,845
Comprehensive earnings$35,198$54,246$56,002
Retained earnings at beginning of year.$135,866$147,687$144,949
Net earnings43,93853,06353,157
Cash dividends(18,360)(18,078)(17,790)
Stock dividends(47,175)(46,806)(32,629)
Retained earnings at end of year$114,269$135,866$147,687
Earnings per share$0.76$0.90$0.89
Average Common and Class B Common shares outstanding57,89258,68559,425
(The accompanying notes are an integral part of these statements.)

CONSOLIDATED STATEMENTS OF
Financial Position
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data)
AssetsDecember 31,
20112010
CURRENT ASSETS:
Cash and cash equivalents$78,612$115,976
Investments10,8957,996
Accounts receivable trade, less allowances of $1,731 and $1,53141,89537,394
Other receivables3,3919,961
Inventories:
Finished goods and work-in-process42,67635,416
Raw materials and supplies29,08421,236
Prepaid expenses5,0706,499
Deferred income taxes578689
Total current assets212,201235,167
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land21,93921,696
Buildings107,567102,934
Machinery and equipment322,993307,178
Construction in progress2,5989,243
455,097440,974
Less—Accumulated depreciation242,935225,482
Net property, plant and equipment212,162215,492
OTHER ASSETS:
Goodwill73,23773,237
Trademarks175,024175,024
Investments96,16164,461
Split dollar officer life insurance74,20974,441
Prepaid expenses3,2126,680
Equity method investment3,9354,254
Deferred income taxes7,7159,203
Total other assets433,493407,300
Total assets$857,856$857,959
Liabilities and Shareholders’ EquityDecember 31,
20112010
CURRENT LIABILITIES:
Accounts payable$10,683$9,791
Dividends payable4,6034,529
Accrued liabilities43,06944,185
Total current liabilities58,35558,505
NONCURRENT LIABILITES:
Deferred income taxes43,52147,865
Postretirement health care and life insurance benefits26,10820,689
Industrial development bonds7,5007,500
Liability for uncertain tax positions8,3459,835
Deferred compensation and other liabilities48,09246,157
Total noncurrent liabilities133,566132,046
SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value—120,000 shares authorized—36,479 and 36,057 respectively, issued25,33325,040
Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued14,60114,212
Capital in excess of par value533,677505,495
Retained earnings, per accompanying statement114,269135,866
Accumulated other comprehensive loss(19,953)(11,213)
Treasury stock (at cost)—71 shares and 69 shares, respectively(1,992)(1,992)
Total shareholders’ equity665,935667,408
Total liabilities and shareholders’ equity$857,856$857,959

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Cash Flows (in thousands)

For the year ended December 31,
201120102009
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net earnings$43,938$53,063$53,157
 Adjustments to reconcile net earnings to net cash provided by operating activities:
 Depreciation19,22918,27917,862
 Impairment charges14,000

 Impairment of equity method investment

4,400

 Loss from equity method investment

194342233

 Amortization of marketable security premiums

1,267522320

 Changes in operating assets and liabilities:

 Accounts receivable

(5,448)717(5,899)

 Other receivables

3,963(2,373)(2,088)

 Inventories

(15,631)(1,447)455

 Prepaid expenses and other assets

5,1064,9365,203

 Accounts payable and accrued liabilities

842,180(2,755)

 Income taxes payable and deferred

(5,772)2,322(12,543)

 Postretirement health care and life insurance benefits

2,0221,4291,384

 Deferred compensation and other liabilities

2,1462,5252,960

 Others

(708)310305
 Net cash provided by operating activities50,39082,80576,994
CASH FLOWS FROM INVESTING ACTIVITIES:

 Capital expenditures

(16,351)(12,813)(20,831)

 Net purchase of trading securities

(3,234)(2,902)(1,713)

 Purchase of available for sale securities

(39,252)(9,301)(11,331)

 Sale and maturity of available for sale securities

7,6808,20817,511

 Net cash used in investing activities

(51,157)(16,808)(16,364)
 CASH FLOWS FROM FINANCING ACTIVITIES:

 Shares repurchased and retired

(18,190)(22,881)(20,723)

 Dividends paid in cash

(18,407)(18,130)(17,825)

 Net cash used in financing activities

(36,597)(41,011)(38,548)
Increase (decrease) in cash and cash equivalents(37,364)24,98622,082
Cash and cash equivalents at beginning of year115,97690,99068,908
Cash and cash equivalents at end of year$78,612$115,976$90,990
Supplemental cash flow information

 Income taxes paid

$16,906$20,586$22,364

 Interest paid

$38$49$182

 Stock dividend issued

$47,053$46,683$32,538
(The accompanying notes are an integral part of these statements.)

Notes to Consolidated Financial Statements ($ in thousands)

PROPERTY, PLANT AND EQUIPMENT:

Depreciation is computed for financial reporting purposes by use of the straight-line method based on the useful lives of 20 to 35 years for building and 5 to 25 years for machinery and equipment. Depreciation expenses was $19,229, $18,279 and $17,862 in 2011, 2010 and 2009, respectively.

Goodwill and intangible assets:

In accordance with authoritative guidance, goodwill and intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually unless certain interim triggering events or circumstances require more frequent testing. All trademarks have been assessed by management to have indefinite lives because they are expected to generate cash flows indefinitely. The Company has completed its annual impairment testing of its goodwill and trademarks at December 31 of each of the years presented. As of December 31, 2009, management ascertained that certain trademarks were impaired, and recorded a pre-tax charge of $14,000. No impairments of intangibles were recorded in 2011 and 2010. This determination is made by comparing the carrying value of the asset with its estimated fair value, which is calculated using estimates including discounted projected future cash flows. If the carrying value of goodwill exceeds the fair value, a second step would measure the carrying value and implied fair value of goodwill. Management believes that all assumptions used for the impairment tests are consistent with those utilized by market participants performing similar valuations.
Answer the following questions.


What were the total cost and book value of property, plant, and equipment at December 31, 2011? (Enter the amounts in thousands.)

Total cost$
Book value$

[img border="0" alt="" height="1" width="8" src="http://edugen.wiley.com/edugen/art2/common/pixel.gif">
[img border="0" alt="" height="1" width="8" src="http://edugen.wiley.com/edugen/art2/common/pixel.gif">

What was the amount of depreciation expense for each of the 3 years 2009–2011? (Hint: Use the statement of cash flows.) (Enter the amounts in thousands.)

Depreciation
2009$
2010$
2011$



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