Question

Dynamic Resources reported the following information for year ending June 30, 2016 (values in millions): Plant, Property & Equipment, gross $3,000 Accumulated Depreciation 1,400 Plant, Property & Equipment, net 1,600 Salvage Value 200 The company also reported the following transactions on the first day of fiscal 2017: Sale of asset with gross PP&E of $600 million for $500 million and useful life of 3 years and no salvage value. Recorded a gain on sale of $300 million. Write off of asset with gross PP&E of $400 million. Asset was purchased 3 years ago with original useful life of 4 years and salvage value of $200 million. Purchase of new equipment for $1,400 million with useful life of 8 years and no salvage value. Assuming the remaining useful life of other equipment is 10 years on a straight-line basis, what is the net PP&E as of June 30, 2017?

Answer 1

Based on the various entries for fixed assets owned by Dynamic Resources, the net PP&E as of June 30, 2017 is $2,260 million.

How much is the PP&E as of June 30, 2017?

This can be found as:

= (Value of old assets - Old asset depreciation in 2017) + (Value of new assets - New asset depreciation in 2017)

Value of old assets:
= 1,600 - 200 for sale of assets - 250

= $1,150 million

Net PP&E is:

= (1,150 - (1,150 / 10 years)) + (1,400 - (1,400 / 8 years useful life))

= $2,260 million

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