le depreclaion method? The Home Depot financial statements and related material

Question

le depreclaion method? The Home Depot financial statements and related material appear in Appendix A at the end of this textbook. Use these to answer the following questions and indicate where in the fin ments you found the information. a. What depreciation method does Home Depot use for buildings, furniture, fixtures, and eq ment? What are the useful lives over which these assets are depreciated? policy regarding impairment of plant assets? Locate Home Depot's balance sheet and find the section entitled "Property and Equipment, at cost." As of January 31, 2016, determine the amount of the company's investment in property and equipment and the amount of depreciation taken to date on those assets. Are these assets, as a whole, near the beginning or end of their estimated useful lives? Explain your answer c.

Explanation / Answer

Part 1)

Based on the information provided in the question, Home Depot uses Straight Line Method of Depreciation for buildings, furnitures, fixtures and equipment. The estimated useful lives over which these assets are depreciated are provided in the below table:

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Part 2)

Based on the information provided in the question, the company recognizes impairment loss when the carrying value (of the assets of a store) is less than undiscounted cash flows (both inflows and outflows) expected to be generated from the use of such assets. The impairment loss is equal to the difference between the carrying value and estimated fair market value of the assets. Such losses are recorded as a part of S,G & A expenses in the consolidated statement of earnings.

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Part 3)

Based on the data provided in the question, the value of investments in Property and Equipment as at 31st January 2016 was $39,266 million and depreciation taken on such assets was $17,075 million.

The assets (when taken in whole) appear to be in the middle of their estimated useful liver which is more inclined towards the beginning of the life of such assets. This is determined by the fact that the total depreciation claimed on property and equipment is 43.49% (17,075/39,2600*100) of cost of total property and equipment which is less than 50%.

Asset Life Buildings 5-45 Years Furniture, Fixtures and Equipment 2-20 Years Leasehold Improvements 5-45 Years

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