Question

Cannington Inc. designs, manufactures, and markets personal computers and related software. Cannington also manufactures and distributes music players (cPod), mobile phones (cPhone), and smartwatches (Cannington Watch) along with related accessories and services, including online distribution of third-party music, videos, and applications. The following information was taken from a recent annual report of Cannington: Property, Plant, and Equipment (in millions): Current Year Preceding Year Land and buildings $569,240 $330,159 Machinery, equipment, and internal-use software 540,778 426,930 Other fixed assets 688,780 518,008 Accumulated depreciation and amortization (722,935) (603,394) a. Compute the book value of the fixed assets for the current year and the preceding year. Current year book value (in millions) $fill in the blank 1 Preceding year book value (in millions) $fill in the blank 2 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 $fill in the blank 4 million of additional fixed assets, which was offset by the additional depreciation expense of $fill in the blank 5 million taken during the current year.

Answer 1

• Answer -

a)-1

Current year book value (in millions) =  $10,75,863

Preceding year book value (in millions) =   $6,71,703

a)-2

Cannington Purchased =  $523,701

Additional Depreciation Expense =  $119,541

• Calculation and explanation for your clear understanding :

Book Value of Asset = Gross Value of Asset - Accumulated Depreciation

	Current  Year	Preceding Year
Land and buildings	$569,240	$330,159
Machinery,equipment & internal-use software	$540,778	$426,930
Other fixed assets	$688,780	$518,008
Gross value of fixed assets	$17,98,798	$12,75,097
Less: Accumulated depreciation and amortization	($722,935)	($603,394)
Book value of fixed assets	$10,75,863	$6,71,703

Current year book value (in millions) =  $10,75,863

Preceding year book value (in millions) =   $6,71,703

a)-2

	Current  Year	Preceding Year	Purchases ( Current Year - Preceding Year)
Land and buildings	$569,240	$330,159	$239,081
Machinery,equipment & internal-use software	$540,778	$426,930	$113,848
Other fixed assets	$688,780	$518,008	$170,772
Gross value of fixed assets	$17,98,798	$12,75,097	$523,701

• Additional Depreciation = Current Year Depreciation - Preceding Year Depreciation

= $722,935 -  $603,394

= $119,541.

Cannington Purchased =  $523,701

Additional Depreciation Expense =  $119,541.