1. A business’s financial statements show a significant increase in intangible assets as a percentage of total assets. What is likely impact of this on the business’s borrowing needs?
A. Borrowing needs likely to increase during the period
B. Borrowing needs will remain the same because intangible assets are financed with equity
C. Borrowing needs will remain the same because intangible assets do not require cash.
D. Borrowing needs are likely to decrease during the period
2. A company’s fixed assets and depreciation appear on its financial statements as follows:
Based on this data, which of the following conclusions appear to be the most accurate?
A. It appears the company replaced few (or no) fixed assets in 20Y2 and only about one-third of what was due for replacement in 20Y3
B. The company will very likely have to replace a significant amount of fixed assets in the near future
C. The company appears to have replaced a reasonable amount of fixed assets in 20Y2 and more in 20Y3
D. As of year-end 20Y3, it appears that the company’s fixed assets will be fully depreciated in about 3 years
