Please address the following questions regarding Six Flags’ goodwill. Perform computations for 2007 and 2008 unless otherwise indicated. 1. Examine Six Flags’ auditors’ report on the financial statements. Is there anything noteworthy about this report? The Company will continue as a going concern…with substantial doubt about its ability to continue as a going concern due to recurring losses, stockholder’s deficit, and substantial liquidity needs. The financial statements don’t include any adjustments that might result from the outcome of this uncertainty. 2. Examine Six Flags’ balance sheet.
Compute the percentage of total assets comprised by intangible assets, net of amortization. Are intangible assets a significant component of Six Flags’ total assets? Intangible assets/total assets: $1,059,486/3,030,845=34. 96% Yes, intangible assets are a significant component of total assets, at almost 35% 3. Refer to part (k) of footnote (1).
What is Six Flags’ goodwill balance at December 31, 2008? What proportion of Six Flags’ 2008 intangible assets is attributable to goodwill? Is goodwill a significant component of Six Flags’ total assets? Has Six Flags taken any impairment charges against its goodwill in 2008 or 2007?
Goodwill Dec. 31, 2008 = $1,048. 1 million Int. Assets/goodwill = $1,059,486/$1,048,122 = 101. 08% Yes, goodwill is a significant component of assets at 101. 08% No, according to the Six Flag’s, the company has not taken any impairment charges in 2008 or 2007; however, in note 2 it does have recorded impairment on assets held for sale ($3,490) and $1,088 for 2008 and 2007, respectively. 4. Examine Six Flags’ stockholders equity section and note any issues of concern. Based on what you observe, what do you conclude about Six Flags’ past profitability?
Research Paper On Impairment Asset
Part A: Measurement of Tangible and Intangible assets under Accounting Standards Assets are classified according to their "tangibility", that are tangible assets or intangible assets. Under tangible assets, are classified as either current or non-current assets. AASB 1010 "Recoverable Amount of Non- Current Assets", which applied to non-current assets measured on the cost basis that is requires ...
The Company was less than $75 million; book equity does not exceed the fair market value of equity; since 2004 – 2008 the Company’s stockholder equity has a negative trend, which signifies no profit 5. Compute Six Flags’ net profit margin (net income (loss)/Total revenues) for the last three years. How has Six Flags’ performed over the last three years? Year200820072006 Net income-$134,933-278,129-327,588 Total revenue$1,021,298970,825942,177 Performance-13. 21%-28. 34%-34. 77% Net Income seems to be increasing each year, along with Revenues; the perfomance over the last 3 years is in a positve trend . Read part (c) of footnote (1).
What factors does management identify as casting substantial doubt on Six Flags’ ability to continue as a going concern? What happens if Six Flags defaults on its PIERS? The factors that management identifies as casting substantial doubt on the Company’s ability to continue as a going concern are 1) a history of net losses, which are principally attributable to insufficient revenue to cover fixed costs; 2) a stockholder’s deficit; 3) substantial uncertainty about being able to refinance its debt.
If the Company defaults on its PIERS, then the lenders would be permitted to accelerate the obligations due from Six Flags. Also, such a default would result in most or all of Six Flag’s long-term debt to become due and payable. 7. Goodwill reflects the economic benefit that accrues to a firm due to its ability to generate an above normal rate of return. Based on your analysis thus far, do you believe Six Flags is capable of generating an above normal rate of return?
Based on your answer, do you believe that Six Flags’ goodwill has suffered an economic impairment? In other words, regardless of what Six Flags balance sheet purports, do you believe that Six Flags has goodwill with an economic value in excess of $1 billion? Yes, I believe Six Flags is capable of generating an above normal rate of return based on its positive trend with net income and revenue increasing the last 3 year. However, it will take another couple of years, based on the positive trend, for Six Flags to see such results.
The Term Paper on Marxism Economic Base
How convincing was the Marxist critique of the capitalist state? This next unit of theory is entitled 'Ideology and Discourse.' The theorists we " re examining -- Althusser, Bakhtin, and Foucault -- are discussing how ideology works, and how ideologies construct subjects. All of these theorists are coming from a Marxist perspective, using ideas and terms developed in Marxist theory, though only ...
Yes, I do believe that the Company has suffered an economic impairment; No, I do not believe that the Company has goodwill with an economic value in excess of $1 billion due to the financial strain that the Company has experienced for the last several years. 8. Describe the procedure management follows in conducting their annual impairment test of goodwill, as described in the first paragraph of part (k) footnote (1).
Based on this test, why did they conclude that “no impairment was required”? If their stock price were to drop to ZERO, would an impairment be required?
Management’s procedure: 1) identifies reporting units, 2) determines carrying value of each unit by assigning assets and liabilities to those reporting units, 3) determine fair value of each reporting unit and compare it to carrying value amount of reporting unit. No impairment was required because their comparison showed the fair value of the single reporting unit exceeded their carrying amount. If their stock price dropped to ZERO, an impairment would not be required because they are comparing the market price of their stock to their carrying amount of stockholder’s equity, which in a deficit.
Also, the Company is anticipating those assets to produce future benefits that exceed its costs. 9. If Six Flags’ goodwill has no economic value, the amount reported on the balance sheet is an example of what type of measurement error (gaap-based measurement error, unintentional measurement error, or intentional measurement error).
GAAP-based measurement error because in the paragraph describing goodwill, the Company includes what rule it is following, SFAS No. 142. 10. Complete the following table to show how Six Flags’ 2008 balance sheet would change if it fully impaired its goodwill. Ignore income tax effects.
The Business plan on Tangible Assets Intangible Goodwill Aasb
The Australian Accounting Standards Board (AASB) is currently deliberating over the recent US accounting standards requiring that internally generated intangible assets and goodwill be valued and placed on the Balance Sheet. This will require the Valuation of Patents, Trademarks, Customer Lists, R&D (Commercialisation phase) and any other Intangible Asset deemed separable or legal / ...
Classify “Redeemable Minority Interest” and “Mandatorily Redeemable Preferred Stock” as liabilities. | |Assets |Liabilities |Owners’ Equity | |As reported: |$3,030,845 |$3,474,670 |$-443,825 | |Goodwill Adjustment: |$1,971,359 | |$1,971,359 | |Adjusted figures: |$5,002,204 |$3,474,670 |$1,527,534 | 1. Using the liabilities and assets reported on Six Flags’ balance sheet, as well as Six Flags’ liabilitiesand assets adjusted for the write-off of goodwill, compute Six Flags total debt-to-total assets ratio. Interpret the results. Which ratio is more representative of Six Flags’ economic solvency? What is the implication for Six Flags’ creditors and shareholders? Would you invest in Six Flags? |Reported |Adjusted | |Reported |Adjusted | |Assets |$3,030,845 |$5,002,204 |Debt |$3,474,670 |$3,474,670 | |Liabilities |$3,474,670 |$3,474,670 |Equity |-$443,825 |$1,527,534 | |D-to-total assets |$1. 15 |$0. 69 |D-to-E |-$7. 3 |$2. 27 | |ratio | | | | | | As reported, the Company shows a higher debt to assets versus the adjusted numbers show that the Company has a lower debt to assets, making the company more solvent. The adjusted ratio shows a more accurate representation of Six Flags’ economic solvency because assets are shown to be more than liabilities.
This implication for Six Flags’ creditors and shareholders is positive news, in contrast to the auditors opinion of the Company’s ability to continue as a going concern. I believe I would eventually invest in Six Flags because of the positive trend with net income and revenue postings the last three years. Also, the debt-to-equity ratio using the adjusted figures shows more accurately Six Flag’s financial position with its debt ———————– 1
