Reitmans (Canada) Limited is a leading Canadian retailer that operates more than 415 stores under the Reitmans, RW&CO, and Penningtons banners. Exhibit 8.27 provides an extract from Reitmans’ annual report for its fiscal year ended January 30, 2021.

Required 

a. Determine the average age percentage of Reitmans’ property and equipment. Compare this with the ratio for Dollarama and identify which company would be able to go longer without replacing its assets based on this ratio. 

b. Given that Reitmans estimates that its fixtures and equipment will have useful lives between 3 and 20 years, determine the annual straight-line depreciation rate that Reitmans is using for its fixtures and equipment.
c. Explain, in your own words, why Reitmans does not begin depreciating assets until they are ready for their intended use. 

d. If Reitmans’ net carrying amount for property and equipment was $66,112 thousand for its year ended January 30, 2021 (as shown above), and $88,090 thousand for its year ended February 1, 2020, and its sales revenue was $533,362 thousand for its fiscal year ended January 30, 2021, calculate Reitmans’ fixed asset turnover ratio. Compare this with the ratio for Dollarama and comment on which company did a better job of using its long-term assets to generate revenues.

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Property and Equipment (in thousands of Canadian dollars) Cost Accumulated depreciation Net carrying amount Depreciation expense Land Buildings $5,860 $37,880 0 16,661 $5,860 $21,219 $0 $1,295 Buildings Fixtures and equipment Leasehold improvements Fixtures and Equipment $71,525 41,692 $29,833 $ 7,344 10 to 50 years 3 to 20 years Leasehold Improvements $32,643 23,443 $ 9,200 $ 2,923 Reitmans' depreciation policies for its property and equipment state that: Depreciation is recognized in net earnings on a straight-line basis over the estimated useful lives of each component on an item of property and equipment. Land is not depreciated. Leasehold improve- ments are depreciated over the lesser of the estimated useful life of the asset and the lease term. Assets not in service include expenditures incurred to-date for equipment not yet available for use. Depreciation of assets not in service begins when they are ready for their intended use. Depreciation is calculated over the depreciable amount, which is the cost of an asset, less its residual value. The estimated useful lives for the current and comparative periods are as follows: Total $147,908 81,796 $ 66,112 $ 11,562 Depreciated over the lesser of the estimated life of the asset and the lease term