Estimated useful lives for financial statement purposes are as follows: Asset Buildings and improvements Fixtures and equipment Transportation equipment Selected Income Statement Information Required: ($in millions) Depreciation and amortization Income from continuing operations before income taxes Income from continuing operations. Source Walmart Stores, Inc., 2014 annual report Assume a 35% tax rate. Life (in Years) 3-40 2-30 3-15 Years Ended January 31, 2015 January 31, 2015 $ 9,100 24,799 16.814 $ 8,800 24,656 16,551 1. Estimate the average useful life of each firm's long-lived assets as of January 31, 2015. 2. Calculate a revised estimate of Walmart's depreciation expense for the year ended January 31, 2015, using the estimated average useful life of Target's assets. Use this amount to recalculate Walmart's income before taxes and income from continuing operations for the year ended January 31, 2015. 3. Calculate a revised estimate of Target's depreciation expense for the year ended January 31, 2015, using the estimated average useful life of Walmart's assets. Use this amount to recal- culate Target's earnings before income taxes and net earnings from continuing operations for the year ended January 31, 2015. 4 Why might a financial analyst want to make adjustments in requirements 2 and 3? 5. What factors will affect the reliability and accuracy of the adjustments performed in requirements 2 and 3? Coses 11-55 Walmart Stores, Inc. Property and Equipment ($ in millions) Land Buildings and improvements Fixtures and equipment Transportation equipment Property under capital lease Property and equipment Accumulated depreciation Property and equipment, net January 31, 2015 $ 26,261 97,496 January 31, 2014 $ 26,184 95,488 45,044 42,971 2,807 2,785 5,787 5,661 177,395 173,089 (63,115) (57,725) $114,280 $115,364
Estimated useful lives for financial statement purposes are as follows: Asset Buildings and improvements Fixtures and equipment Transportation equipment Selected Income Statement Information Required: ($in millions) Depreciation and amortization Income from continuing operations before income taxes Income from continuing operations. Source Walmart Stores, Inc., 2014 annual report Assume a 35% tax rate. Life (in Years) 3-40 2-30 3-15 Years Ended January 31, 2015 January 31, 2015 $ 9,100 24,799 16.814 $ 8,800 24,656 16,551 1. Estimate the average useful life of each firm's long-lived assets as of January 31, 2015. 2. Calculate a revised estimate of Walmart's depreciation expense for the year ended January 31, 2015, using the estimated average useful life of Target's assets. Use this amount to recalculate Walmart's income before taxes and income from continuing operations for the year ended January 31, 2015. 3. Calculate a revised estimate of Target's depreciation expense for the year ended January 31, 2015, using the estimated average useful life of Walmart's assets. Use this amount to recal- culate Target's earnings before income taxes and net earnings from continuing operations for the year ended January 31, 2015. 4 Why might a financial analyst want to make adjustments in requirements 2 and 3? 5. What factors will affect the reliability and accuracy of the adjustments performed in requirements 2 and 3? Coses 11-55 Walmart Stores, Inc. Property and Equipment ($ in millions) Land Buildings and improvements Fixtures and equipment Transportation equipment Property under capital lease Property and equipment Accumulated depreciation Property and equipment, net January 31, 2015 $ 26,261 97,496 January 31, 2014 $ 26,184 95,488 45,044 42,971 2,807 2,785 5,787 5,661 177,395 173,089 (63,115) (57,725) $114,280 $115,364
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter8: Investing Activities
Section: Chapter Questions
Problem 1.3AIC: Estimate the average total estimated useful life of depreciable property, plant, and equipment....
Related questions
Question
Transcribed Image Text:Estimated useful lives for financial statement purposes are as follows:
Asset
Buildings and improvements
Fixtures and equipment
Transportation equipment
Selected Income Statement Information
Required:
($in millions)
Depreciation and amortization
Income from continuing operations
before income taxes
Income from continuing operations.
Source Walmart Stores, Inc., 2014 annual report
Assume a 35% tax rate.
Life (in Years)
3-40
2-30
3-15
Years Ended
January 31,
2015
January 31,
2015
$ 9,100
24,799
16.814
$ 8,800
24,656
16,551
1. Estimate the average useful life of each firm's long-lived assets as of January 31, 2015.
2. Calculate a revised estimate of Walmart's depreciation expense for the year ended January
31, 2015, using the estimated average useful life of Target's assets. Use this amount to
recalculate Walmart's income before taxes and income from continuing operations for the
year ended January 31, 2015.
3. Calculate a revised estimate of Target's depreciation expense for the year ended January 31,
2015, using the estimated average useful life of Walmart's assets. Use this amount to recal-
culate Target's earnings before income taxes and net earnings from continuing operations
for the year ended January 31, 2015.
4 Why might a financial analyst want to make adjustments in requirements 2 and 3?
5. What factors will affect the reliability and accuracy of the adjustments performed in
requirements 2 and 3?
Coses 11-55
Transcribed Image Text:Walmart Stores, Inc.
Property and Equipment
($ in millions)
Land
Buildings and improvements
Fixtures and equipment
Transportation equipment
Property under capital lease
Property and equipment
Accumulated depreciation
Property and equipment, net
January 31,
2015
$ 26,261
97,496
January 31,
2014
$ 26,184
95,488
45,044
42,971
2,807
2,785
5,787
5,661
177,395
173,089
(63,115)
(57,725)
$114,280
$115,364
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning