Kellogg Company and Kraft Food Group, Inc. are two companies operating in the packaged food industry. You

Question:

Kellogg Company and Kraft Food Group, Inc. are two companies operating in the packaged food industry. You have noticed their products in numerous grocery and convenience stores and are interested in their production process. One of your first steps is analyzing the information on their productive capacity. Examine the fixed asset disclosures in the two companies€™ financial statements to address the following issues:
a. What categories of tangible long- lived assets do each of the companies report? What is the useful life of each category? Compare the categories and useful lives disclosed by each company.
b. For each company, what is the percent of long- lived tangible to total assets in 2013 and 2012? In the definition of long- lived tangible assets, include the total of property, plant, and equipment (PPE) €“ net. Comment on any differences between the two companies.
c. Compute average age and average remaining life for 2013 and 2012. Comment on any differences between the two companies.
d. Compute the fixed asset turnover in 2013. In the definition of long- lived tangible assets (fixed assets), include the total property, plant, and equipment (PPE) €“ net. Comment on any differences between the two companies.
The Company€™s property consists mainly of plants and equipment used for manufacturing activities. These assets are recorded at cost and depreciated over estimated useful lives using straight- line methods for financial reporting and accelerated methods, where permitted, for tax reporting. Major property categories are depreciated over various periods as follows ( in years): manufacturing machinery and equipment 5€“ 30; office equipment 4€“ 5; computer equipment and capitalized software 3€“ 7; building components 15€“ 25; building structures 50. Cost includes interest associated with significant capital projects. . . .
Kellogg Company and Kraft Food Group, Inc. are two companies

Additional financial statement information:

Kellogg Company and Kraft Food Group, Inc. are two companies

Property, plant, and equipment are stated at historical cost and depreciated by the straight- line method over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods ranging from 3 to 20 years and buildings and improvements over periods up to 40 years€¦
Property, plant, and equipment at December 28, 2013 and December 29, 2012 were:

Kellogg Company and Kraft Food Group, Inc. are two companies

Additional financial statement information:

Kellogg Company and Kraft Food Group, Inc. are two companies
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0132162302

1st edition

Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Question Posted: