Case 6-36 (Static) Financial statement effects of depreciation methods LO 6-3

Answer the following questions using data from the Campbell Soup Company 2020 annual report (See pages 42, 43, 45 and 81. The PDF in the link may not be accessible.):

Required:

Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbells.

Why the particular method is used for the purpose described.

What method do you think the company uses for income tax purposes?

Calculate the ratio of the depreciation and amortization expense for 2020, which is reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule.

Based on the ratio calculated in part b and the depreciation method being used by Campbells, what is the average useful life being used for its depreciation calculation?

Assume that the use of an accelerated depreciation method for 2020 would have resulted in 25% more depreciation and amortization than reported by Campbell's at August 2, 2020. By what percentage would this have reduced the retained earnings amount reported at August 2, 2020?

Case 6-36 (Static) Financial statement effects of depreciation methods LO 6-3 Answer the following questions using data from the Campbell Soup Company 2020 annual report (See pages 42 , 43,45 and 81 . The PDF in the link may not be accessible.): Required: a. 1. Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbell's. 2. Why the particular method is used for the purpose described. 3. What method do you think the company uses for income tax purposes? b. Calculate the ratio of the depreciation and amortization expense for 2020 , which is reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule. c. Based on the ratio calculated in part b and the depreciation method being used by Campbell's, what is the average useful life being used for its depreciation calculation? d. Assume that the use of an accelerated depreciation method for 2020 would have resulted in 25% more depreciation and amortization than reported by Campbell's at August 2, 2020. By what percentage would this have reduced the retained earnings amount reported at August 2, 2020? CAMPBELL SOUP COMPANY 21. Supplemental Financial Statement Data Balance Sheets See accompanying Notes to Consolidated Financial Statements Case 6-36 (Static) Financial statement effects of depreciation methods LO 6-3 Answer the following questions using data from the Campbell Soup Company 2020 annual report (See pages 42 , 43,45 and 81 . The PDF in the link may not be accessible.): Required: a. 1. Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbell's. 2. Why the particular method is used for the purpose described. 3. What method do you think the company uses for income tax purposes? b. Calculate the ratio of the depreciation and amortization expense for 2020 , which is reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule. c. Based on the ratio calculated in part b and the depreciation method being used by Campbell's, what is the average useful life being used for its depreciation calculation? d. Assume that the use of an accelerated depreciation method for 2020 would have resulted in 25% more depreciation and amortization than reported by Campbell's at August 2, 2020. By what percentage would this have reduced the retained earnings amount reported at August 2, 2020? CAMPBELL SOUP COMPANY 21. Supplemental Financial Statement Data Balance Sheets See accompanying Notes to Consolidated Financial Statements