Please calculate each table. Please provide a clear calculation and brief explan
ID: 2759566 • 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
Solution:
Annual Sales forecast Capital Spending - ( % - sales ) Capital spending (millions) Working Year 1 50,000 4.40% 2,200 4.4% * 50,000 Year 2 55,000 5% 2,750 5% * 55,000 Year 3 58,000 5.30% 3,074 5.3% *58,000 Year 4 60,000 5.80% 3,480 5.8 % * 60,000 Year 5 65,000 6% 3,900 6 % * 65,000