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	$494,500		$286,810
Machinery, equipment, and internal-use software	469,775		370,875
Other fixed assets	598,345		449,995
Accumulated depreciation and amortization	(628,015)		(524,170)

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.

b. Would you normally expect Cannington’s book value of fixed assets to increase or decrease during the year?

Answer 1

Requiremnt -a: Computation of Book Value of Asset - Cannington Inc.
	Current Year	Preceding Year
Land And Buildings	$494,500	$286,810
Machinery, Equipment, And Internal-Use Software	$469,775	$370,875
Other Fixed Assets Related To Leases	$598,345	$449,995
Total Assets	$1,562,620	$1,107,680
Less: Accumulated Depreciation And Amortization	-$628,015	-$524,170
Book Value	$934,605	$583,510

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 $454940 Million (1562620-1107680) Of Additional Fixed Assets, Which Was Offset By The Additional Depreciation Expense Of $103845Million (628015-524170) Taken During The Current Year.

b.Book value of Fixed Asset to Increase

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