Case 8-40 Research and Analysis

Access the 2010 annual report for Nike, Inc., by clicking on the Investors and Annual Reports links at www.nikebiz.com.

Required:

a. Examine the balance sheet and identify the name Nike uses for fixed assets.

Are fixed assets reported at net book value?

(Yes or No)

b. Examine Note 3 and identify the original cost of Nike's fixed assets and the current balance in accumulated depreciation. Round your answers to one decimal place.

Original cost	$
Accumulated depreciation	$
On balance sheet	$

c. According to Note 1, what method of depreciation does Nike use? Select (Straight-line method, or Double-declining method)

d. According to the statement of cash flows, how much has Nike spent on fixed assets over the past three years? $_____?

Does the company generate enough cash from operations to sustain that level of investment? (Yes or No)

e. Calculate the average age and useful life of Nike's fixed assets. Use "Depreciation" on the statement of cash flows as depreciation expense for the year. Round your answers to one decimal place.

Average Age. ?
Average Useful life. ?

What can you conclude from these calculations?