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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear

Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com.

Required:

With regard to depreciation methods:

a. What depreciation method does Under Armour use? What depreciation method does Columbia use?

b. What are the typical useful lives of each company’s operating assets?

c. What effect will the useful lives have on the company’s financial statements?

To determine

(a)

Introduction:

There are many types of depreciation method which follow by the company. Mostly company uses the two types of method one is straight line method and written down value method.

To choose:

What depreciation method does Under Armour use? What depreciation methods does Columbia use?

Explanation

In the Columbia Sportswear company use the following method:

“Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The principal estimated useful lives are:

land improvements, 15 years;

buildings and building improvements, 15-30 years;

furniture and fixtures, 3-10 years;

machinery, software and equipment, 3-10 years.

Leasehold improvements are depreciated over the lesser of the estimated useful life of the improvement, which is most commonly 7 years, or the remaining term of the underlying lease...

To determine

(b)

Introduction:

There are many types of depreciation method which follow by the company. Mostly company uses the two types of method one is straight line method and written down value method.

To choose:

What are the typical useful lives of each company operating assets?

To determine

(c)

Introduction:

There are many types of depreciation method which follow by the company. Mostly company uses the two types of method one is straight line method and written down value method.

To choose:

What effect will the useful lives on the company’s financial statement?

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