Question

Apple Inc. designs, manufactures, and markets personal computers and related software. Apple also manufactures and distributes music players (iPod) and mobile phones (iPhone) along with related accessories and services, including online distribution of third-party music, videos, and applications. The following information was taken from a recent annual report of Apple: Property, Plant, and Equipment (in millions): Current Year Preceding Year Land and buildings $ 6,956 $ 4,863 Machinery, equipment, and internal-use software 37,038 29,639 Other fixed assets 5,263 4,513 Accumulated depreciation and amortization (26,786) (18,391)
a. Compute the book value of the fixed assets for the current year and the preceding year. Current year book value (in millions) $ Preceding year book value (in millions) $ A comparison of the book values of the current and preceding years indicates that they increased . A comparison of the total cost and accumulated depreciation reveals that Apple purchased $ million of additional fixed assets, which was offset by the additional depreciation expense of $ million taken during the current year.
b. Would you normally expect Apple's book value of fixed assets to increase or decrease during the year?

Answer 1

Answer:

Explanation:

                                                       current year($)      preceeding year($)

Land and building                           6956                        4863

Machinery ,equipment                     37038                        29639

internal-use software

Other fixed asset                             5263                         4513

Total asset                                     49257                         39015

less:Accumulated depreciation     -26786                -18391

and amortization

Book value                                       22471                 20624

Additional fixed asset purchased : 49257 - 39015 = 10242 million

Depreciation : 26786 - 18391 = 8395

b) It is generally expected that apple fixed asset will increase as it requires latest fixed asset and technology for its manufacturing process.