Question
Hank Aarron 2018 2019 2018 2019 Land 10,000 10,000 25,000 25,000 Buildings 360,000 320,000 136,000 136,000 Equipment 266,000 280,000 580,000 600,000 Vehicles 185,000 200,000 650,000
| Hank | Aarron | ||
| 2018 | 2019 | 2018 | 2019 |
Land | 10,000 | 10,000 | 25,000 | 25,000 |
Buildings | 360,000 | 320,000 | 136,000 | 136,000 |
Equipment | 266,000 | 280,000 | 580,000 | 600,000 |
Vehicles | 185,000 | 200,000 | 650,000 | 675,000 |
Accumulated Depreciation | 410,000 | 444,000 | 693,000 | 888,000 |
Depreciation expense | 84,000 | 88,000 | 191,400 | 198,400 |
Purchases of fixed assets | 30,000 | 55,000 | 85,000 | 50,000 |
Net income | 108,000 | 102,000 | 85,000 | 82,000 |
Cash flow from operations | 165,000 | 67,000 | 205,000 | 88,000 |
Cash flow from financing activities | (105,000) | (10,000) | 100,000 | 150,000 |
Based only on the information above calculate
- If both companies depreciate their buildings over 40 years and no fixed assets are fully depreciated, what are the lives of the equipment and vehicles for each of the companies? Hint: You need to solve simultaneous equations for depreciation expense.
- Calculate
- Purchases to gross disposals
- Purchases to net disposals
- Purchases to depreciation expense
- Percentage increase (decrease in net fixed assets)
- Depreciation expense to fixed assets.
- Which company would be the best investment and why.
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