Interpreting disclosures regarding long-lived assets Exhibit 9.8 presents a partial balance sheet for Hewlett-Packard Company (HP). a
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a. HP uses the straight-line method to depreciate its buildings, leasehold improvements, machinery, and equipment. It recognized depreciation expense of $1,922 million during fiscal 2007. Compute the average total life and average age of its depreciable assets during fiscal 2007.
b. Did HP appear to abandon or dispose of any depreciable assets during fiscal 2007? Explain.
c. What is the likely rationale for treating Customer Contracts, Core Technology, Patents, and Product Trademarks as intangibles subject to amortization? Consider each of these four items separately.
d. HP uses the straight-line amortization method for intangibles subject to amortization and recognized $783 million of amortization during fiscal 2007. Compute the average total life and average age of intangibles subject to amortization for fiscal 2007.
e. HP acquired Compaq Computer seven years ago. Why does HP treat the Compaq brand name as an intangible not subject toamortization?
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Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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