a) Find the discussion of depreciation methods used by Intel on Page 695. Explain why the particular method is used for the purpose described. What method do you think the company used for income tax purposes? The method used for depreciation by Intel is a straight-line method of deprecation having estimated 2-4 years of machinery and equipment useful life and 4-40 years for building useful life. This method is chosen because of the ease of calculation for a larger corporation b) Calculate the ratio of the depreciation expense for 2008 reported on Page 689 in the consolidated statements of cash flow to the cost (not net book value) of property, plant, and equipment reported in the schedule shown on Page 695. Average age (2008) of Intel Property, Plant, and Equipment (Ratio) Accumulated Depreciation 30,544 = = 7.0 years Depreciation Expense 4,360 Based on the above analysis , it appears that the average age of Intel?s assets has increased slightly during 2008 from the previous years respectively. This trend the age of the company?s assets affects its competitive position in the market place. This significant age of the assets provides an indication of company?s capital replacement policy estimating future capital expenditures. The company?s perceived profitability might be affected when Intel?s return on assets increase as Intel?s assets get older. c) Based on the ratio calculated in part b and the depreciation method being used by Intel, what is the average useful life being used for its depreciation calculation? d) Assume that the use of an accelerated depreciation method would have resulted in 25% more accumulated depreciation than reported at December 27,2008, and that Intel?s Retained Earnings account would have been affected by the entire difference. By what percentage would this have reduced the retained earnings amount reported on December 27,2008?. Financial Statements effects of Depriciation methods Answer the following questions using data from intel Corporation annual report from 10-K for the fiscal year ended dec 27,2008

Accounting Assignment Case. 6.27 Financial Statement Effects of Depreciation Methods Submitted by: Dana Al-Sami Email: alsami.d@mcmaster.ca Tel: 647-866-2210 Submitted to Prof. Al Seaman T.A. Mark Stewart Course: MCM722 Financial Accounting Department of Communication Studies and Multimedia Faculty of Humanities, McMaster University December 5,2012 a) Find the discussion of depreciation methods used by Intel on Page 695. Explain why the particular method is used for the purpose described. What method do you think the company used for income tax purposes? The method used for depreciation by Intel is a straight-line method of deprecation having estimated 2-4 years of machinery and equipment useful life and 4-40 years for building useful life. This method is chosen because of the ease of calculation for a larger corporation b) Calculate the ratio of the depreciation expense for 2008 reported on Page 689 in the consolidated statements of cash flow to the cost (not net book value) of property, plant, and equipment reported in the schedule shown on Page 695. Average age (2008) of Intel Property, Plant, and Equipment (Ratio) Accumulated Depreciation 30,544 = Depreciation Expense = 7.0 years 4,360 Based on the above analysis , it appears that the average age of Intel's assets has increased slightly during 2008 from the previous years respectively. This trend the age of the company's assets affects its competitive position in the market place. This significant age of the assets provides an indication of company's capital replacement policy estimating future capital expenditures. The company's perceived profitability might be affected when Intel's return on assets increase as Intel's assets get older. c) Based on the ratio calculated in part b and the depreciation method being used by Intel, what is the average useful life being used for its depreciation calculation? d) Assume that the use of an accelerated depreciation method would have resulted in 25% more accumulated depreciation than reported at December 27,2008, and that Intel's Retained Earnings account would have been affected by the entire difference. By what percentage would this have reduced the retained earnings amount reported on December 27,2008?. Financial Statements effects of Depriciation methods Answer the following questions using data from intel Corporation annual report from 10-K for the fiscal year ended dec 27,2008