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Question: At the end of 2011, Solar Power


At the end of 2011, Solar Power Associates (SPA) had total assets of $17.6 billion and total liabilities of $9 billion. Included among the assets were property, plant, and equipment with a cost of $4.9 billion and accumulated depreciation of $2.6 billion.
SPA completed the following selected transactions during 2012: The company earned total revenues of $26.6 billion and incurred total expenses of $21.7 billion, which included depreciation of $1.8 billion. During the year, SPA paid $1.3 billion for new property, plant, and equipment and sold old plant assets for $0.8 billion. The cost of the assets sold was $1.6 billion, and their accumulated depreciation was $1 billion.

Requirements
1. Explain how to determine whether SPA had a gain or loss on the sale of old plant assets during the year. What was the amount of the gain or loss, if any?
2. Show how SPA would report property, plant, and equipment on the balance sheet at December 31, 2012, after all the year’s activity. What was the book value of property, plant, and equipment?
3. Show how SPA would report its operating activities and investing activities on its statement of cash flows for 2012. Ignore gains and losses.


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> North Mark (NM) owns vast amounts of corporate bonds. Suppose that on June 30, 2012, NM buys $800,000 of CitiSide bonds at a price of 102. The CitiSide bonds pay cash interest at the annual rate of 7% and mature at the end of five years. 1. How much did

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> Assume Doltron paid $19 million to purchase Northeast.com. Assume further that Northeast had the following summarized data at the time of the Doltron acquisition (amounts in millions): Northeast’s long-term assets had a current market

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> The following questions are unrelated except that they all apply to plant assets and intangible assets: 1. The manager of Carpet World regularly debits the cost of repairs and maintenance of plant assets to Plant and Equipment. Why would she do that, sin

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> This case is based on the consolidated financial statements of RadioShack Corporation given in Appendix B at the end of this book. 1. Read Note 4: Acquisitions. Does RadioShack Corporation own any foreign subsidiaries? How much of the subsidiary does it

2.99

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