Using Financial Reports: Analyzing the Age of Assets

In its recent annual report, Sysco Corporation noted it “is the largest North American distributor of food and related products primarily to the foodservice ‘food-away-from-home’ industry. We provide products and related services to approximately 400,000 customers, including restaurants, healthcare, and educational facilities, lodging establishments, and other foodservice customers.” A note to a recent annual report for Sysco contained the following information:

(in thousands)                                    Current Year

Land                                                    $ 307,328

Buildings and improvements              2,818,300

Fleet and equipment                           2,072,116

Computer hardware and software       569,669

5,767,413

Less accumulated depreciation           2,788,213

                                                                 $2,979,200

Depreciation expense (in thousands of dollars) charged to operations was $361,062 in the current year. Depreciation generally is computed using the straight-line method for financial reporting purposes.

Required:

1. What is your best estimate of the average expected life for Sysco’s depreciable assets?

2. What is your best estimate of the average age of Sysco’s depreciable assets?