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 | $699,410 | $405,658 | ||
Machinery, equipment, and internal-use software | 664,440 | 524,558 | ||
Other fixed assets related to leases | 846,286 | 636,463 | ||
Accumulated depreciation and amortization | (888,251) | (741,375) |
a. Compute the book value of the fixed assets for the current year and the preceding year.
Current year book value | $ |
Preceding year book value | $ |
A comparison of the book values of the current and preceding years indicates that they . 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?
a | ||
Current Year | Preceding Year | |
Land and buildings | 699410 | 405658 |
Machinery, equipment, and internal-use software | 664440 | 524558 |
Other fixed assets related to leases | 846286 | 636463 |
Total assets | 2210136 | 1566679 |
Less: Accumulated depreciation and amortization | 888251 | 741375 |
Book value | 1321885 | 825304 |
Current year book value | 1321885 | |
Preceding year book value | 825304 | |
Purchase of additional fixed assets | 643457 | =2210136-1566679 |
Additional depreciation expense | 146876 | =888251-741375 |
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 $643457 million of additional fixed assets, which was offset by the additional depreciation expense of $146876 million taken during the current year. | ||
b | ||
Normally expect the book value of fixed assets to increase |
Cannington, Inc., designs, manufactures, and markets personal computers and related software. The following information was taken...
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