Cоmputing аnd Recоrding Depletiоn (FSET) The Nelson Oil Compаny estimаted that the oil reserve that it acquired during the year would produce 4.8 million barrels of oil. The company extracted 360,000 barrels the first year, 600,000 barrels the second year, and 720,000 barrels the third year. Nelson paid $40,800,000 cash for the oil reserve. a. Compute depletion for each of the following years: Year 1 ${#1} Year 2 ${#2} Year 3 ${#3} b. Using the financial statements effects template, report the (i) acquisition of the oil reserve and (ii) depletion for Year 1. If a transaction affects more than one account in a single category, enter the positive amount in the first row. Balance Sheet Income Statement Cash Noncash Contra Contributed Earned Net Transaction Asset + Assets - Assets = Liabilities + Capital + Capital Revenues - Expenses = Income i Oil reserve acquistion {#4} {#5} {#6} {#7} {#8} {#9} {#10} {#11} {#12} {#13} {#14} {#15} {#16} {#17} {#18} {#19} {#20} {#21} ii Year 1 depletion {#22} {#23} {#24} {#25} {#26} {#27} {#28} {#29} {#30} {#31} {#32} {#33} {#34} {#35} {#36} {#37} {#38} {#39}
Interpreting аnd Repоrting Prоperty, Plаnt, аnd Equipment (PPE) Expenditures (FSET) General Mills, Inc. (the Cоmpany), is a global consumer foods company. The firm manufactures and sells a wide range of branded products and is a major supplier to the foodservice and baking industries. The company’s core product areas are ready-to-eat cereal, super-premium ice cream, convenient meal solutions, and healthy snacking. The following data are taken from the company’s 2020 annual report. From the balance sheet: ($ millions) May 31, 2020 May 26, 2019 Equipment $6,428.0 $6,548.3 Buildings 2,412.6 2,477.2 Capitalized software 668.5 631.6 Construction in progress 373.5 343.8 Land 66.1 73.6 Equipment under finance lease 5.8 5.7 Buildings under finance lease 0.3 0.3 Total land, buildings, and equipment 9,954.8 10,080.5 Less accumulated depreciation (6,374.2) (6,293.3) Total $3,580.6 $3,787.2 From the income statement ($ millions): 2020 2019 Net sales $17,626.6 $16,865.2 REQUIRED a. Compute the PPE turnover for 2020. Assuming an average PPE turnover of 4.0 for the company’s closest competitors, does General Mills appear to be capital intensive? Numerator ($ millions) Denominator ($ millions) Result PPE Turnover 2020 ${#1} ÷ ${#2} = General Mills' PPE turnover for 2020 is {#3} {#4} its closest competitors. b. Calculate the percentage depreciated of the Company's depreciable assets at the end of fiscal year 2020. Numerator ($ millions) Denominator ($ millions) Result Percentage depreciated of depreciable assets 2020 ${#5} ÷ ${#6} = c. The Company reported depreciation and amortization (not reported separately) expense of approximately $594.7 million in 2020. Estimate the average useful life of its depreciable assets by dividing average depreciable assets by depreciation expense. Numerator ($ millions) Denominator ($ millions) Result Estimated useful life remaining in 2020 ${#7} ÷ ${#8} = years d. During 2020, the Company purchased $460.8 million of land, buildings, and equipment for cash. Use the financial statement effects template to reflect the asset purchases and the year’s depreciation charge. ● Note: Use negative signs with your answers, when appropriate. ● Note: Select "N/A" as your answer if a part of the accounting equation is not affected. ($ millions) Balance Sheet Income Statement Cash Noncash Contra Contributed Earned Net Transaction Asset + Assets - Assets = Liabilities + Capital + Capital Revenue - Expenses = Income a. Acquisition {#9} {#10} {#11} {#12} {#13} {#14} {#15} {#16} {#17} {#18} {#19} {#20} {#21} b. Depreciation expense {#22} {#23} {#24} {#25} {#26} {#27} {#28} {#29} {#30} {#31} {#32} {#33} {#34} Totals + - = + - =
Cоmputing аnd Assessing Plаnt Asset Impаirment Zeibart Cоmpany purchased equipment fоr $180,000 on July 1, 2019, with an estimated useful life of 10 years and expected salvage value of $20,000. Straight-line depreciation is used. On July 1, 2023, economic factors cause the fair value of the equipment to decline to $72,000. On this date, Zeibart examines the equipment for impairment and estimates $100,000 in future cash inflows related to use of this equipment. a. Compute the impairment loss, if any. ${#1}Enter as a positive number. Enter $0 if the equipment would not be considered impaired. b. Determine the amount of depreciation Zeibart would record for the 12 months from July 1, 2023 through June 30, 2024. ${#2} Hint: Assume no change in salvage value. Round amount to the nearest whole dollar amount c. Using the financial statement effects template, report the impairment loss, if any, and depreciation for the 12 months ending June 30, 2024. Balance Sheet Income Statement Cash Noncash Contra Contributed Earned Net Asset + Assets - Assets = Liabilities + Capital + Capital Revenues - Expenses = Income Impairment {#3} {#4} {#5} {#6} {#7} {#8} {#9} {#10} {#11} Depreciation {#12} {#13} {#14} {#15} {#16} {#17} {#18} {#19} {#20}