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Apple Inc
Apple Inc. designs, manufactures, and markets personal computers and related software. Apple also manufactures and distributes music players (iPod) and mobile phones (iPhone) along with related accessories and services, including online distribution of third-party music, videos, and applications. The following information was taken from a recent annual report of Apple:
| Property, Plant, and Equipment (in millions): | ||||
| Current Year | Preceding Year | |||
| Land and buildings | $16,216 | $13,587 | ||
| Machinery, equipment, and internal-use software | 65,982 | 54,210 | ||
| Other fixed assets | 8,205 | 7,279 | ||
| Accumulated depreciation and amortization | (49,099) | (41,293) | ||
a. Compute the book value of the fixed assets for the current year and the preceding year.
| Current year book value (in millions) | $fill in the blank 1 |
| Preceding year book value (in millions) | $fill in the blank 2 |
A comparison of the book values of the current and preceding years indicates that they increased . A comparison of the total cost and accumulated depreciation reveals that Apple purchased $fill in the blank 4 million of additional fixed assets, which was offset by the additional depreciation expense of $fill in the blank 5 million taken during the current year.
b. Would you normally expect Apple's book value of fixed assets to increase or decrease during the year?
Increase
Expert Solution
a.
| Current year | Preceding year | |
| Land and building | $16,216 | $13,587 |
| Machinery, equipment internal-use software | $65,982 | $54,210 |
| Other fixed assets | $8,205 | $7,279 |
| Total asset | $90,403 | $75,076 |
| less: Accumulated depreciation and amortization | -$49,099 | -$41,293 |
| Book value | $41,304 | $33,783 |
Current year book value (in millions) = $41,304
Preceding year book value (in millions) = $33,783
Additional fixed asset purchased (in million) = Current Year - Preceding Year
= $90,403 - $75,076
= $15,327
Depreciation (in million) = Current Year - Preceding Year
= $49,099 - $41,293
= $7,806
b. It is normally expected that the apple fixed assets would rise because it needs current fixed assets and technology for its manufacturing process.
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