Problem

Inferring Activities Affecting Fixed Assets from Notes to the Financial Statements and Ana...

Inferring Activities Affecting Fixed Assets from Notes to the Financial Statements and Analyzing the Impact of Depredation on Cash Flows

Singapore Airlines reported the following information in the notes to a recent annual report (in Singapore dollars):

SINGAPORE AIRLINES Notes to the Accounts 19. Property, Plant and Equipment(in $ millions) The Company
	Beginning of Year	Additions	Disposals/Transfers	End of Year
Cost
Aircraft	18,180.1	2,257.2	1,730.3	18,707
Other fixed assets (summarized)	6,659.1	2,160.8	2,399.0	6,420.9
	24,839.2	4,418.0	4,129.3	25,127.9
	Beginning of Year	Depreciation	Impairment Loss	Disposals/Transfers	End of Year
Accumulated depreciation
Aircraft	5,634.2	1,427.1	41.4	843.9	6,258.8
Other fixed assets (summarized)	2,730.9	385.2	____	239.4	2,876.7
	8,365.1	1,812.3	41.4	1,083.3	9,135.5

Singapore Airlines also reported the following cash flow details:

Cash Flow from Operating Activities(in $ millions)
	Current Year	Prior Year
Profit before taxation	1,198.6	2,547.2
Adjustments for
Depreciation	1,812.3	1,488.8
Impairment loss	41.4
Surplus (gain) on disposal of fixed assets	(62.7)	(49.1)\|
Other adjustments (summarized)	(1,544.2)	414.9
Cash generated from operations	1,445.4	4,401.8

Required:

1. Reconstruct the information in Note 19 using T-accounts for Fixed Assets and Accumulated Depreciation:

2. Compute the amount of cash the company received for disposals and transfers for the current year. Show computations.

3. Compute the percentage of depreciation expense to cash flows from operations for the current year. What do you interpret from the result?

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