Week 6 Course Project
David S. Pesi
Dell is a company that provides global information technology and offers its customers a range of solutions and services brought directly by Dell and through other distribution channels. They focus on providing technology solutions that are more accessible, more efficient and easier to manage. They built their reputation as a leading technology provider by taking suggestions from their customers and developing solutions that meet customer needs. A few years ago, they proposed a broad conversion of the company to become an end-to-end technology solutions company.
In 2011, Dell’s Property, Plant, ...view middle of the document...
In 2012, Dell made $18 million in proceeds from the sale of facilities and land; in 2013, they made $14 million. On the other side of the spectrum, they spent $376 million in 2012 for the acquisition of businesses and other investing opportunities while in 2013 $2,562 million was spent.
Depreciation is given by using the straight-line method over the estimated economic lives of the assets that range from two to five years for all other assets and ten to thirty years for buildings. As for leasehold improvements, they are amortized over the shorter of five years or the lease term. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred. Dell capitalizes eligible internal-use software development costs incurred subsequent to the completion of the preliminary project stage. Development costs are amortized over the shorter of the expected useful life of the software or five years. Costs associated with maintenance and minor enhancements to the features and functionality of Dell's website are expensed as incurred. Dell uses the same depreciation methods for financial statements as it does for tax returns.
Dell, Inc. has intangible assets that consist primarily of the amortization of customer relationships, customer lists, acquired technology, trade names, and non-compete agreements. As of Feb 2013, Dell held a worldwide portfolio of 3,449 patents and had an additional 1,660 patent applications pending. Also, they hold licenses to use many third-party patents. Dell has gotten U.S. federal trademark registration for the DELL word mark and the Dell logo mark. They own registrations for 107 of their other trademarks in the U.S. At February 3, 2013, they had pending applications for registration of 14 other trademarks.
Amounts on the most recent Cash Flow Statement that relate to the purchase and sale of Intangible Assets
Assets Gross Accumulated
Customer Relationships $1,569 million ($506 million) $1,063 million
Technology $1,156 million ($490 million) $666 million
Non-compete Agreements $70 million ($42 million) $28 million
Trade names $81 million (41 million) $40 million
Intangible assets lack physical substance, but they may provide substantial value to the company that owns them. Examples of intangible assets include patents, copyrights, trademarks, and franchise licenses. Property, plant, and equipment is the title given to long-lived assets the business uses to help generate revenue. This category is sometimes called fixed assets. Examples include land, natural resources such as timber or mineral reserves, buildings, production equipment, vehicles, and office furniture. With the exception of land, the cost of an asset in this category is allocated to expense over the asset's estimated useful life.
Dell has goodwill. The goodwill of a business is the whole advantage of the reputation and connection with customers together with the circumstances...