Christy Company operates in the entertainment industry. In June 2013, Christy purchased Matt’s Movies which produces and distributes various video products. The purchase resulted in $2.7 million in goodwill. Since then, Christy has undertaken a number of business acquisitions and diversifications as the company expands. Selected date from a recent annual report are as follows: ((dollars in thousands) Property, Plant & Equipment and Intangibles Balance SheetCurrent YearPrior YearFilm cost (net of amortization)$1,272$ 991Artists’ Contracts and other Entertainment Assets761645Property, Plant & Equipment (net)2,7332,559Excess of Cost over Fair Value of Assets Acquired3,0763,355Accumulated Depreciation on Property, Plant & Equipment1,1781,023Income Statement Total Revenue9,71410,644Statement of Cash Flows Income from Operations880445Adjustments Depreciation289265Amortization208190Other Adjustments-1,618-256Net Cash provided by Operations-241644 Required 1. Compute the cost of the property, plant and equipment at the end of the current year. Explain your answer.

The cost of any asset can be computed as per the below formulaOriginal Cost = Net Value +…

Answered: Compute the cost of the property, plant…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Christy Company operates in the entertainment industry. In June 2013, Christy purchased Matt’s Movies which produces and distributes various video products. The purchase resulted in $2.7 million in goodwill. Since then, Christy has undertaken a number of business acquisitions and diversifications as the company expands. Selected date from a recent annual report are as follows: ((dollars in thousands)

Property, Plant & Equipment and Intangibles Balance Sheet	Current Year	Prior Year
Film cost (net of amortization)	$1,272	$ 991
Artists’ Contracts and other Entertainment Assets	761	645
Property, Plant & Equipment (net)	2,733	2,559
Excess of Cost over Fair Value of Assets Acquired	3,076	3,355
Accumulated Depreciation on Property, Plant & Equipment	1,178	1,023
Income Statement
Total Revenue	9,714	10,644
Statement of Cash Flows
Income from Operations	880	445
Adjustments
Depreciation	289	265
Amortization	208	190
Other Adjustments	-1,618	-256
Net Cash provided by Operations	-241	644

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1. Compute the cost of the property, plant and equipment at the end of the current year. Explain your answer.

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