Book Value of Fixed Assets Cannington, Inc., designs, manufactures, and markets
ID: 2402925 • Letter: B
Question
Book Value of Fixed Assets 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 Machinery, equipment, and internal-use software Office furniture and equipment Other fixed assets related to leases Accumulated depreciation and amortization 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? $478,140 454,233 71,721 578,549 (607,238) $277,321 358,605 62,158 435,107 (506,828) IncreaseExplanation / Answer
(a) Current year book value = Cost price of fixed assets - Accumulated depreciation
= ( 478,140 + 454,233 + 71,721 + 578,549 ) - 607,238
= 1,582,643 - 607,238
= $975,405
Preceeding year book value = Cost price of fixed assets - Accumulated depreciation
= ( 277,321 + 358,605 + 62,158 + 435,107) - 506,828
= 1,133,191 - 506,828
= $626,363
(b) Book value of fixed assets normally decreases during the year due to depreciation provided on the fixed assets.