Question

Book Value of Fixed Assets Cannington, Inc., designs, manufactures, and markets personal computers and related software. The following information was taken from a recent annual report of Cannington industries: Property, Plant, and Equipment (in millions): Current Year Preceding Year Land and buildings $596,210 $345,802 566,400 447,158 Machinery, equipment, and internal-use software Other fixed assets related to leases 721,414 542,551 Accumulated depreciation and amortization (757,187) (631,983) a. Compute the book value of the fixed assets for the current year and the preceding your Current year book value Preceding year book value A comparison of the book values of the current and preceding years indicates that they increased A comparison of the total cost and accumulated depreciation reveals that Cannington purchased million of additional fixed assets, which was offset by the additional depreciation expense of million taken during the current year. b. Would you normally expect the book value of fixed assets to increase or decrease during the year? Increase

Answer 1

a
	Current year	Preceding year
Land and buildings	596210	345802
Machinery, equipment, and internal-use software	566400	447158
Other fixed assets related to leases	721414	542551
Total assets	1884024	1335511
Less: Accumulated depreciation and amortization	-757187	-631983
Book value	1126837	703528
Current year book value	1126837
Preceding year book value	703528
b
Purchase of Assets	548513	=1884024-1335511
Additional Depreciation	125204	=757187-631983
A comparison of the book values of the current and preceding years indicates that they increased . A comparison of the total cost and accumulated depreciation reveals that Cannington purchased $548513 million of additional fixed assets, which was offset by the additional depreciation expense of $125204 million taken during the current year.
c
The Book value of fixed assets would normally increase