Asset categories practical example

Asset categories   practical example


Hi everybody thanks for joining us for another
one of our practical lessons in this video. We’ll go through dingies 2017 annual report
specifically we’ll be interested in seeing the way companies assets are represented in its balance sheet. Let’s make a quick search for the firm’s consolidated
balance sheet. We are interested in assets. Here we are we have these types of assets
cash and cash equivalents available for sale investment securities accounts receivables inventories deferred
income taxes prepaid expenses and assets held for sale right in our previous lesson. We discussed cash accounts receivable and
inventory in its three states. Raw materials work in progress goods and finished
goods. And you see them present in P and GS balance
sheet. So that’s great. What about the other items we haven’t seen
so far. Let’s start with available for sale investment
securities. These can be bonds options futures and shares. The company has bought because it had extra
liquidity as the name suggests these aren’t likely to be held in the long run deferred income taxes
are taxes the companies paid now but relate to future periods. Hence the company must pay less tax in these
future periods. Therefore the payment of taxes now results
in an asset a future claim the company has prepaid expenses are similar to deferred income taxes actually. The only difference is they designate costs
differently than taxes. For example if a company rents a real estate
property and pays its rent for an entire year in advance it can register prepaid expenses as an asset
on its balance sheet because it has a claim it can make in the future. The asset has been prepaid for the entire
year. Therefore the company has the right to use
it. And finally we have assets held for sale. These are not investment securities but other
assets the company wants to sell. OK. These are the assets in P and GS balance sheet
as you can see there is a subtotal which shows their value amounted to 20 $6.5 billion as of June
2017. P and GS non-current assets comprise property
plant and equipment goodwill trademarks and other intangible assets and other non-current assets. Earlier we discussed PND and what it shows
us goodwill and trademarks are two of the topics we will touch on later in the course and other non-current
assets is a category of other miscellaneous assets which are not part of the categories above. Okay excellent. What if we wanted to go a step further and
dig into what’s contained in property plant and equipment for example how can we do that. Well the important thing to remember is that
companies provide notes to their financial statements where they describe each generic category such as
the one P-P Indy is made of let’s search for property plant and equipment in this paedophile Okay here’s
what we have buildings for $7 billion machinery and equipment land and constructions in progress. The amount we see in the balance sheet is
less. Any accumulated depreciation tables like this
one are available for almost all generic categories in the balance sheet.

Leave a Reply

Your email address will not be published. Required fields are marked *