Question

The Ford Motor Company’s footnotes included the following ($ in millions):


The notes to the income statement for 2011 revealed depreciation and amortization expense of $3,533 million. The account Special Tools, net is increased by new investments in tools, dies, jigs, and fixtures necessary for new models and production processes. Ford then amortizes these investments over various periods and reduces the account directly. When special tools are disposed of, the account is reduced by the net book value.
1. Assume that Ford spent $2,000 million on special tools in 2011. The company disposed of special tools with a net book value of $700 million. How much amortization did Ford record on special tools in 2011?
2. Given your answer to requirement 1, estimate the cost of the new acquisitions of land, plant, and equipment. Assume all disposals of plant and equipment involved fully depreciated assets with zero bookvalue.


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  • CreatedFebruary 20, 2015
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