Estimating Useful Life and Percent Used Up

The property and equipment section (inventory) of the lululemon athletica 2018 balance sheet follows

Required:

a. Consider the level of the various PPE components. Does it seem likely that the company manufactures its own inventory? Why or why not?

b. What is meant by work in progress? Explain how this item will be accounted for in the coming months at lululemon.

c. Compute the estimated useful life of lululemons depreciable assets.

d. Compute the estimated percent used up of lululemons depreciable assets. How do we interpret this figure?

Jan. 28, 2018 Property and Equipment (in thousands) Land Buildings. Leasehold improvements Furniture and fixtures Computer hardware Computer software.. Equipment and vehicles Work in progress Property and equipment, gross Accumulated depreciation.. Property and equipment, net Feb. 3, 2019 $ 78,636 38,030 362,571 103,733 69,542 230,689 15,009 74,271 972,481 (405,244) $567,237 $ 83,048 39,278 301,449 91,778 61,734 173,997 14,806 51,260 817,350 (343,708) $473,642 Depreciation expense related to property and equipment was $122.4 million and $108.0 million for the years ended February 3, 2019, and January 28, 2018, respectively. Jan. 28, 2018 Property and Equipment (in thousands) Land Buildings. Leasehold improvements Furniture and fixtures Computer hardware Computer software.. Equipment and vehicles Work in progress Property and equipment, gross Accumulated depreciation.. Property and equipment, net Feb. 3, 2019 $ 78,636 38,030 362,571 103,733 69,542 230,689 15,009 74,271 972,481 (405,244) $567,237 $ 83,048 39,278 301,449 91,778 61,734 173,997 14,806 51,260 817,350 (343,708) $473,642 Depreciation expense related to property and equipment was $122.4 million and $108.0 million for the years ended February 3, 2019, and January 28, 2018, respectively