Question
Using 2018 Annual Report for Dollar General pages 41-68 (it is public information and can be found online by googling. Chegg does not allow me
Using 2018 Annual Report for Dollar General pages 41-68 (it is public information and can be found online by googling. Chegg does not allow me to add the link)
The longer an assets useful life, the lower the annual depreciation expense reported on the income statement and the higher the income each year. It is of interest, therefore, to know whether a companys useful life estimates are more conservative or more aggressive than its competitors.
If you assume straight-line depreciation (which is consistent with the companys policy), and zero salvage value, you can estimate the average life for depreciable assets as follows:
Average useful life = Depreciable asset cost*/Depreciation expense
*Depreciable assets exclude land and construction-in-progress, since these assets are not depreciated.
Dollar General reports that the useful lives of its depreciable assets range from three years for some furniture, fixtures and equipment to up to 40 years for buildings.
Estimate the useful life, on average, for Dollar General's depreciable assets at 2/1/2019. Since Dollar General does not report depreciation expense as a separate line-item on its income statement (as most companies do not), use the depreciation expense found in Note 1 to the Financial Statements. Be careful not to divide thousands with millions; either put all numbers in terms of thousands or millions.
a. 13 years
b. 9 years
c. 10 years
d. 11 years
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