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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): a. Compute the book value of the fixed assets for the current year and the preceding year and explain the differences, if any. b. Would you normally expect Apple’s book value of fixed assets to increase or decrease during the year? Why?

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 10, Problem 21E
Textbook Problem
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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):

Chapter 10, Problem 21E, Apple Inc. designs, manufactures, and markets personal computers and related software. Apple also , example  1

  1. a. Compute the book value of the fixed assets for the current year and the preceding year and explain the differences, if any.
  2. b. Chapter 10, Problem 21E, Apple Inc. designs, manufactures, and markets personal computers and related software. Apple also , example  2 Would you normally expect Apple’s book value of fixed assets to increase or decrease during the year? Why?

a.

To determine

Compute the book value of the fixed assets for the current year and the preceding year.

Explanation of Solution

Fixed Assets: It refers to the long-term assets having a useful life of more than a year which is, acquired by a company to be used in its business activities, for generating revenue. Examples of fixed assets are Plant, Property, Equipment, Land, and Buildings.

Compute the book value of the fixed assets for the current year and the preceding year.

ParticularsCurrent Year  in millions ($)Preceding Year in millions ($)
Cost of the fixed assets:  
Land and buildings6,9564,863
Machinery, equipment, and internal-use software37,03829,639
Other fixed assets5,2634,513
Total fixed assets49,25739,015
Less: Accumulated depreciation and amortization(26,786)(18,391)
Book Value22,47120,624

Table (1)

The book value has increased from the preceding year to the current year by <

b.

To determine

Explain whether it is normally expected that Company A’s book value of fixed assets would increase or decrease during the year.

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Chapter 10 Solutions

Financial Accounting
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