Interpreting disclosures regarding long-lived assets. Exhibit 9.6 presents a partial balance sheet for General Mills Inc., a consumer foods processing
a. General Mills is not in the business of developing computer software. Why then does computer software appear as an asset on its balance sheet?
b. Is it likely that General Mills recognizes depreciation on its computer software? Explain.
c. General Mills computes depreciation on its depreciable assets using the straight-line method and recognized depreciation of $421 million during fiscal 2007. Compute the average total life and the average age of depreciable assets for fiscal 2007.
d. Did General Mills likely dispose of any depreciable assets during fiscal 2007? Explain
e. Does General Mills appear to be a firm that primarily grows by internal expansion or by acquiring other consumer foods companies? Explain.
f. Is it likely that General Mills made a corporate acquisition during fiscal 2007? Explain.
g. What is General Mills likely rationale for treating patents and trademarks as intangibles subject to amortization?
h. What is General Mills likely rationale for treating brand names as an intangible not subject to amortization?
i. The income statement of General Mills reports Interest Expense-Net. Based on the information in Exhibit 9.6, what item has General Mills likely netted against interestexpense?
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