Estimate the PPE disposals of Ford from annual report
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All dollar amounts are in millions 2007 2006
Land..........................................................$ 764 $803
Buildings and land improvements..............$14,402 $13,719
Machinery, equipment and other................$45,303 $43,913
Construction in progress.............................$2,031 $2,224
Total land, plant, equipment.......................$62,500 $60,658
Accumulated depreciation............................(36,561) $34,983)
Net land, plant and equipment $25,939 $25,675
Statement of Cash Flows for 2007
Operating activities
Depreciation..............................................$3,474
Investing activities:
Capital expenditures................................ (5,971)
I am working with this problem and I need help with the following:
1) Estimate the book value of property and equipment disposed of during 2007.
2) Assume that a half-year's depreciation is taken on all assets acquired and disposed of during the year. Estimate the average depreciation life of Ford's property and equipment. Assume that none of the disposals was land, and eliminate the land balance when estimating the average depreciation life.
3) Estimate the average age of property and equipment (excluding land) owned by Ford as of Dec. 31, 2007.
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Solution Summary
By using the published annual report and a simplifying assumption (half year convention), figure out the disposals during the year. The instruction shows how to tease out additions, depreciation and other details that make it possible to map out the change in property, plant and equipment accounts and learn more about their activity.
Solution Preview
1. This question is a bit misleading because it says to "estimate." You don't really have to estimate because you have enough amounts to solve for it. See the excel spreadsheet where I added columns for the activity ...
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