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Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
Amerbran (A)
Reece, James S.
Functional Area(s):
   Finance/Financial Management
   Financial Accounting
   Financial Analysis and Management
   For Profit
Difficulty Level: Intermediate
Pages: 2
Teaching Note: Available. 
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First Page and the Assignment Questions:

Amerbrand Company (A)

 Amerbrand Company was a diversified company that sold various consumer products, including food, tobacco, distilled, and personal care products and financial services. Financial statements for the company for 2017 are shown in Exhibit 1. These statements reflect the following transactions (dollar amounts in thousands):

1. Depreciation and amortization expense was $115,974.

2. Net income included a loss of $66,046 resulting from the write-off of some obsolete equipment. The equipment had not yet been disposed of.

3. Net income included $59,610 from Amerbrand’s investment in a subsidiary; none of this income had been received in cash.

4. The year-end balance in Deferred Income Taxes was $17,548 lower than it was at the start of the year.

5. New property, plant, and equipment purchases totaled $260,075, all paid for with cash. Disposals of fixed assets generated $33,162 cash proceeds.

6. Acquisition of another company that was made for cash resulted in additional depreciable assets of $31,691 and goodwill of $102,030.

7. Cash dividends were paid in the amount of $216,158.

8. The firm declared and issued a 100 percent common stock dividend effective September 10, 2017; that is, each shareholder received as a dividend a number of shares equal to his or her holdings prior to the dividend. The newly issues shares were valued at par in recording this transaction.

9. The firm spent $30,609 to purchase treasury stock on the open market. Some of the shares so acquired were issued to certain employees as a bonus. 

10. The firm increased its short-term debt as indicated on the balance sheet in Exhibit 1. Long-term borrowing decreased by $34,606.


1Prepare a statement of cash flows for the year 2017. In order for your statement to show the correct increase in cash ($4,960), you will need to add a “miscellaneous activities” category; this will capture several transactions that were not described because they are somewhat complicated.