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Concept Introduction:
This is one of the methods to calculate the depreciation on assets. Under this method the
Requirement-1:
To Calculate:
The percentage of original cost of Apple's Property plant and equipment account remains to be depreciation as on Sept. 30, 2017 and as on Sept. 24, 2016
Answer to Problem 1AA
The percentage of original cost of Apple's Property plant and equipment account remains to be depreciation as on Sept. 30, 2017 and as on Sept. 24, 2016 are as follows:
| Sept. 30, 2017 | Sept. 24, 2016 | |
| % Amount to be depreciated | 45.0% | 44.1% |
Explanation of Solution
The percentage of original cost of Apple's Property plant and equipment account remains to be depreciation as on Sept. 30, 2017 and as on Sept. 24, 2016 are calculated as follows;
| $ in Millions | Sept. 30, 2017 | Sept. 24, 2016 |
| Gross property, plant and equipment (A) | 75,076 | 61,245 |
| Net property, plant and equipment (B) | 33,783 | 27,010 |
| % Amount to be depreciated (B/A) | 45.0% | 44.1% |
Concept Introduction:
Amortization of Intangible Assets:
Intangible assets are not physical assets which can be depreciated over its life. Hence to amortize the cost of the intangible asset, amortization expense is recorded in the books. The nature of the Amortization is same as of the depreciation. An intangible asset is amortized using the straight line method over its life.
Requirement-2:
To Identify:
If Apple capitalizes or expense the research and development cost
Answer to Problem 1AA
Apple capitalizes and amortizes the research and development cost over the life of the product
Explanation of Solution
Intangible assets are not physical assets which can be depreciated over its life. Hence to amortize the cost of the intangible asset, amortization expense is recorded in the books. The nature of the Amortization is same as of the depreciation. An intangible asset is amortized using the straight line method over its life.
Apple capitalizes and amortizes the research and development cost over the life of the product
Concept Introduction:
Total Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-3:
To Calculate:
Total assets turnover for Apple for the year ended Sept. 30, 2017 and Sept. 24, 2016
Answer to Problem 1AA
Total assets turnover for Apple for the year ended Sept. 30, 2017 and Sept. 24, 2016 are as follows:
| Sept. 30, 2017 | Sept. 24, 2016 | |
| Total assets turnover | 0.66 | 0.70 |
Explanation of Solution
Total assets turnover for Apple for the year ended Sept. 30, 2017 and Sept. 24, 2016 are calculated as follows:
| $ in Millions | Sept. 30, 2017 | Sept. 24, 2016 |
| Sales (A) | 229,234 | 215,639 |
| Beginning Total Assets (B) | 321,686 | 290,345 |
| Ending Total Assets (C) | 375,319 | 321,686 |
| Average Total Assets (D) =(B+C)/2 | 348,503 | 306,016 |
| Total assets turnover = (A/D) | 0.66 | 0.70 |
Concept Introduction:
Total Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-4:
To Identify:
If the Total assets turnover for Apple for the year ended Sept. 30, 2017 and Sept. 24, 2016 is showing favorable or unfavorable trend
Answer to Problem 1AA
The Total assets turnover for Apple for the year ended Sept. 30, 2017 and Sept. 24, 2016 is showing unfavorable trend.
Explanation of Solution
Total assets turnover for Apple for the year ended Sept. 30, 2017 and Sept. 24, 2016 are as follows:
| Sept. 30, 2017 | Sept. 24, 2016 | |
| Total assets turnover | 0.66 | 0.70 |
Hence, The Total assets turnover for Apple for the year ended Sept. 30, 2017 and Sept. 24, 2016 is showing unfavorable trend.
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Chapter 10 Solutions
Fundamental Accounting Principles
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