Adjusting PP&E Turnover for Right$-$of$-$Use Assets

Notes to financial statements include the following.

years.

a$.$ Calculate the growth rates for the current and prior year for both Net property and equipment and ROS assets. Round percentages to two decimal places

Which is growing more quickly? $[$Net PPE assets $/$ ROU assets$]$

B$.$ Fedex recorded depreciation expense of $$4,764$ million in the current fiscal year. Assume that Gross property and equipment approximates depreciable asset cost. Compute the PP&E useful life for the current year.

How does this ratio compare to the remaining lease term of the operating leased assets?

The estimated useful life of PPE assets is $[$about the same $/$ half as long $/$ twice as long$]$ as the weighted average lease term.

Indicate whether the following would explain the difference.

c$.$ Compute PP&E turnover for FedEx for the current and prior years.

d$.$ Adjust total net property and equipment to include the operating and finance leases, as applicable. Recompute PP&E turnover.

Compare the adjusted ratios to the ratios from part b$.$ Does the adjustment make a significant difference?

$[$Yes $/$ No$].$ The inclusion of $[$finance leases $/$ operating leases$][$significantly increases $/$ significantly decreases $/$ does not significantly change$]$ the turnover ratio.