Marvelous Materials presented the following partial balance sheet, income statements, and note disclosure for its fiscal years ending in 2016 and 2015. All amounts are in millions.
The following appeared in Note 7 of the company's annual report:
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term.
Analyze and interpret Marvelous Materials' plant assets and the company's related ratios and disclosures by answering the questions that follow:
A. Compute PPE turnover for 2016 and 2015 if net plant assets for 2014 are $3,197 in millions. Interpret and explain any change in turnover.
B. What long-term assets might not be reflected on its balance sheet?
C. Estimated depreciation expense is $510 (in millions) for 2016. Compute the percent depreciated for 2016. What implication does the used up computation have for future cash flows?

Question

Marvelous Materials presented the following partial balance sheet, income statements, and note disclosure for its fiscal years ending in 2016 and 2015. All amounts are in millions.
   The following appeared in Note 7 of the company's annual report:
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term.
  Analyze and interpret Marvelous Materials' plant assets and the company's related ratios and disclosures by answering the questions that follow:
A. Compute PPE turnover for 2016 and 2015 if net plant assets for 2014 are $3,197 in millions. Interpret and explain any change in turnover.
B. What long-term assets might not be reflected on its balance sheet?
C. Estimated depreciation expense is $510 (in millions) for 2016. Compute the percent depreciated for 2016. What implication does the used up computation have for future cash flows?

Quizplus · Accepted Answer

The Answer of Marvelous Materials presented the following partial balance sheet, income statements, and note disclosure for its fiscal years ending in 2016 and 2015. All amounts are in millions.
   The following appeared in Note 7 of the company's annual report:
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term.
  Analyze and interpret Marvelous Materials' plant assets and the company's related ratios and disclosures by answering the questions that follow:
A. Compute PPE turnover for 2016 and 2015 if net plant assets for 2014 are $3,197 in millions. Interpret and explain any change in turnover.
B. What long-term assets might not be reflected on its balance sheet?
C. Estimated depreciation expense is $510 (in millions) for 2016. Compute the percent depreciated for 2016. What implication does the used up computation have for future cash flows?

Marvelous Materials Presented the Following Partial Balance Sheet, Income Statements