Palfinger Ag Case Study Essay

1035 Words Mar 10th, 2013 5 Pages
Palfinger’s AG – Property, Plant, and Equipment

a.) Palfinger’s property would include the property that they have to store the forklifts and other large inventory that they have on. The equipment would include all equipment that is necessary to make the inventory that they sell such as the cranes.

b.) This number represents the total of the plant, property, and equipment that Palfinger has. This number should be recorded as the historical cost that the plant, property and equipment was purchased at. This total number also has the total sum of amortized depreciation subtracted out to get the net amount of PP&E that is put on the balance sheet

c.) In the notes to the financial statements, Palfinger reports the plant, property and
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Net book value at end of year 1 is $8,793. Less what you received on the sale $7,500. Gives you a disposal loss of $1,293 using the straight-line method of depreciation. You then add the disposal loss from the previous years depreciation $1,880, which results in a total income statement impact of $3,173. ii. Using double- declining method, the first year ending balance of $6,404 is subtracted form the proceeds of the sale netting in a gain of $1,096 on the disposal. Once this is subtracted form the previous years depreciation $4,269, you get a total income statement impact of $3,173. iii. The total income statement impact is exactly the same. The computations turn out to be identical because it is essentially a backwards way of computing the initial cost of the asset of $10,673, minus the proceeds from the sale $7,500, which both gives you $3,173. The difference between the two is perception. One reports a gain on disposals, while the other reports a loss.

| | Palfinger |Palfinger |Caterpillar |Caterpillar |
| |2007 |2006

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