Question

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 $614,820 $356,596 584,079 Machinery, equipment, and internal-use software 461,115 Office furniture and equipment 92,223 79,927 Other fixed assets related to leases 559,486 743,932 Accumulated depreciation and amortization (780,821) (651,709) 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 b. Would you normally expect the book value of fixed assets to increase or decrease during the year? Increase Decrease

Answer 1

	a)
			Current Year Book Value	Preceding Year Book value
		Land And Building	614820	356596
		Machinery	584079	461115
		Office Furniture And Equipment	92223	79927
		Other Fixed Asset	743932	559486
		Less:
		Accumulated Depreciation And Losses	-780821	-651709
		Net Book Value	1254233	805415
	b)
		Book value normally expected to be decreased because there is
		addition of depreciation and amortisation cost which reduces the book value of fixed assets.