How many years are left in the lives of Petrobras’ “Equipment and other assets” on average? State clearly any assumptions that you make in arriving at your estimate.

Suppose that Petrobras assumes a zero salvage value for their “Equipment and other assets”. For each $100 in new asset investments, what is the annual amount of depreciation expense charged to the income statement? Suppose that other leading energy companies charge $12 in depreciation expense for each $100 invested in new equipment. Are Petrobras’ depreciation policy assumptions materially different from those of their competitors? Support your answer.

Equipment and other assets

Estimated Useful Life in Years 3 to 30

Net (2007): 49,414,524

Net (2008): 64,145,157

Cost (2008): 119,999,208

Accumulated Depreciation (2008): (55,854,051)