Please calculate each table. Please provide a clear calculation and brief explan
ID: 2758074 • Letter: P
Question
Please calculate each table. Please provide a clear calculation and brief explanation.
Company has the following PP&E table:
[a] please calculate The capital spending (millions)
Annual Sale Forecasts
Capital Spending
(% of sale)
Capital Spending
(millions)
Year + 1
$ 50,000
4.4%
Year + 2
$ 55,000
5.0%
Year + 3
$ 58,000
5.3%
Year + 4
$ 60,000
5.8%
Year + 5
$ 65,000
6.0%
[b] Depreciation Expense Table – Assume 13 years life
Please calculate each year of depreciation amount per year.
DEPRECIATION EXPENSE TABLE
Depreciation Amount Per Year (13 years life)
Depreciable Base
Year + 1
Year + 2
Year + 3
Year + 4
Year + 5
Existing PP&E
$35,000
Capital Spending +1
Capital Spending +2
Capital Spending +3
Capital Spending +4
Capital Spending +5
Total Depreciation Expenses
[c] Please calculate Ending Balance (NET)
PROPERTY, PLANT, AND EQUIPMENT
Capital Spending (Millions)
Ending Balance
(at Cost)
Depreciation Expenses
Accumulated Depreciation
Ending Balance (NET)
Actual 2008
$35,000
(12,000)
$23,000
Year + 1
Year + 2
Year + 3
Year + 4
Year + 5
Annual Sale Forecasts
Capital Spending
(% of sale)
Capital Spending
(millions)
Year + 1
$ 50,000
4.4%
Year + 2
$ 55,000
5.0%
Year + 3
$ 58,000
5.3%
Year + 4
$ 60,000
5.8%
Year + 5
$ 65,000
6.0%
Explanation / Answer
a) Annual sales Capital spending Capital spending forecasts (% of sale) (millions) A B A*B Year + 1 50000 4.40% 2200 Year + 2 55000 5% 2750 Year + 3 58000 5.30% 3074 Year + 4 60000 5.80% 3480 Year + 5 65000 6.00% 3900 b) Depriciation expense table ( assume 13 years life) Depriciable base Year + 1 Year + 2 Year + 3 Year + 4 Year + 5 Existing PPE 35000 2692.31 2692.31 2692.31 2692.31 2692.31 (35000/13 pa) Capital spending + 1 2200 169.23 169.23 169.23 169.23 169.23 (2200/13 pa) Capital spending + 2 2750 0.00 211.54 211.54 211.54 211.54 (2750/13 pa) Capital spending + 3 3074 0.00 0.00 236.46 236.46 236.46 (3074/13 pa) Capital spending + 4 3480 267.69 267.69 (3480/13 pa) Capital spending + 5 3900 300.00 (3900/13 pa) Total depriciation expenses 50404 2861.54 3073.08 3309.54 3577.23 3877.23 c) Ending balance (NET) property plant & equipment Capital spending Ending balance Depriciation Accumulated Ending Balance at cost expenses Depriciation NET A B = B + previous year A C D = D + previous year C B - D Actual 2008 35000 (12000) 23000 Year + 1 2200 37200 (2861.54) (14862) 22338 Year + 2 2750 39950 (3073.08) (17935) 22015 Year + 3 3074 43024 (3309.54) (21244) 21780 Year + 4 3480 46504 (3577.23) (24821) 21683 Year + 5 3900 50404 (3877.23) (28699) 21705