Average useful life Average age of PPE assets
by | Mar 18, 2020 | Uncategorized
ESTION 1
-
‘Average useful life’, ‘Average age of PPE assets’ and ‘Asset Turnover’ are three measures that decision makers can use to analyse the PPE (Property, Plant & Equipment) assets of entities. Fresh Food Ltd and Cheap Food Ltd operate in the same industry. Each entity depreciates its PPE (Property, Plant & Equipment) assets using the straight line approach. An investigation of their financial statements reveals the following information:
|
(Amounts in millions) |
|
Fresh Food Ltd |
Cheap Food Ltd |
| Sales |
$ 22,653 |
$ 33,812 |
| Total Assets (Average) |
22,088 |
36,167 |
| Accumulated Depreciation |
2,701 |
4,359 |
| Depreciation Expense |
381 |
697 |
| Cost of Plant Assets (Average) |
7,715 |
10,237 |
Required:
What conclusion concerning the management of plant assets can be drawn from these data? (word limit: 180 – 240 words)
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