Comprehensive Analysis: Noncurrent and Intangible Assets
Boudreaux Group is an international biochemical and pharmaceutical firm, headquartered in Switzerland. Its 1999 annual report includes the following (Swiss francs in millions):
|
1999 |
1998 |
1997 |
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|
Property, plant, and equipment, |
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|
net |
FF 7,010 |
FF 6,319 |
FF 5,815 |
|
|
Intangible assets |
1,895 |
2,050 |
2,200 |
|
|
Other long term assets |
1,583 |
1,313 |
1,064 |
|
|
Total long term assets |
FF 10,488 |
FF 9,682 |
FF 9,079 |
|
|
Sales |
FF 13,576 |
FF 12,702 |
FF 11,840 |
|
|
Gross profit |
8,145 |
7,139 |
6,295 |
|
|
Gross (original) cost PPE |
13,077 |
11,950 |
10,905 |
|
Intangible assets
Intangible assets comprise acquired intellectual property (including patents, technology, and know how), trademarks, licenses, and other similarly identified rights. They are recorded at their acquisition cost and are amortized over the lower of their legal or estimated economic lives up to a maximum of 10 years. Costs associated with internally developed intangible assets are expensed as incurred.
Required
a. Describe each of Boudreaux’s disclosures related to noncurrent assets.
b. For 1998 and 1999, calculate the fixed asset turnover.
c. For 1998 and 1999, calculate the percentage of PPE depreciated.
d. Discuss and interpret the results of these ratio computations.
e. With regard to intangibles, how has Boudreaux constrained some of the discretion and subjectivity that it might have had otherwise?
f. What impact does the term know how have on your analysis of Boudreaux’s noncurrent assets?