McDonald€™s is the largest and best-known global food-service retailer, with more than 32,000 restaurants in 118 countries. On any day, McDonald€™s serves approximately 1 percent of the world€™s population. Presented on the next page is information related to McDonald€™s property and equipment.
Property and Equipment. Property and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following estimated useful lives: buildings€”up to 40 years; leasehold improvements€”the lesser of useful lives of assets or lease terms, which generally include option periods; and equipment€”three to 12 years.
[In the notes to the financial statements:]
Property and Equipment
Net property and equipment consisted of:

Depreciation and amortization expense was (in millions): 2011€”$1,329.6; 2010€”$1,200.4; 2009€”$1,160.8.
[In its 6-year summary, McDonald€™s provides the following information.]

Instructions
(a) What method of depreciation does McDonald€™s use?
(b) Does depreciation and amortization expense cause cash flow from operations to increase? Explain.
(c) What does the schedule of cash flow measuresindicate?

Transcribed Image Text:

December 31 In millions) Land Buildings and improvements on owned land Buildings and improvements on leased land Equipment, signs and seating Other 2011 $5,328.3 13,079.9 12,021.8 4,757.2 2010 $5,200.5 12,399.4 11,732.0 4,608.5 550.4 542.0 35,737.6 12.903.1) $22,834.5 34,482.4 Accumulated depreciation and amortization Net property and equipment (12421.8) $22,060.6 Cash Provided by Operations (dollars in millions) Cash provided by operations Capital expenditures 2011 2010 2009 $7,150 $6,342 $5,751 $2,730 $2,135 $1,952