McDonald?s is the largest and best-known global food-service retailer, with more than 32,000 restaurants in over 115
Question:
McDonald?s is the largest and best-known global food-service retailer, with more than 32,000 restaurants in over 115 countries. On any day, McDonald?s serves approximately 1 percent of the world?s population. The following is information related to McDonald?s property and equipment.
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 measures indicate?
McDonald's Corporation Summary of Significant Accounting Policies Section 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: December 31 (In millions) 2017 2016 $ 5,662.2 $ 5,465.0 13,695.2 Land Buildings and improvements on owned land Buildings and improvements on leased land Equipment, signs and seating 14,776.9 12,509.2 11,511.9 3,165.7 3,270.9 Other 512.4 500.4 36,626.4 34,443.4 Accumulated depreciation and amortization 14,178.1 13,185.8 Net property and equipment $22,448.3 $21,257.6 Depreciation and amortization expense for property and equipment was (in millions): 2017–$1,227.5; 2016–$1,390.7; 2015–$1,438.0. [In its 6-year summary, McDonald's provides the following information.] (in millions) 2017 2016 2015 Cash provided by operations Capital expenditures $5,551 $6,060 $6,539 1,854 1,821 1,814
Step by Step Answer:
a McDonalds used the straightline method for depreciating its property and equipment b De...View the full answer
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
Students also viewed these Business questions
-
What explains the difference between cash flow from operations and earnings?
-
The MoMi Corporations cash flow from operations before interest and taxes was $2 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the...
-
Cash flow from operations in a business is different than net income from operations in the same business. Discuss the difference in these two measurements of company activity. Which is most...
-
Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into production in Department X, and at the end of processing in this department, three...
-
What is an STS? How are STSs generated experimentally? What are the uses of STSs? Explain how a microsatellite can be a polymorphic STS.
-
All supernovas are objects that emit massive amounts of energy. All quasars are objects that emit massive amounts of energy. Therefore, all quasars are supernovas. Use Venn diagrams to determine...
-
Mind & Motion entered into a real estate purchase contract (REPC) with Celtic Bank to buy a large piece of the banks foreclosed property. Although the county had approved plans to construct...
-
Five data entry operators work at the data processing department of the Georgia Bank. Each day for 30 days, the number of defective records in a sample of 250 records typed by these operators has...
-
You have been hired as a data analyst for the company. Adventure Works managers have requested that you analyze 3 years of sales and cost data to help them answer specific business questions. In the...
-
Consider a particle is confined in a three-level system. The probability of finding the particle in first level is 0.38, for second level 0.36, and for third level it is 0.26. What is the entropy of...
-
Use the information for Lockard Company given in BE11.2. (a) Compute 2020 depreciation expense using the double-declining-balance method. (b) Compute 2020 depreciation expense using the...
-
The following are three different and unrelated situations involving depreciation accounting. Answer the question(s) at the end of each situation. Situation I: Recently, Broderick Company experienced...
-
Name the layers of the meninges, and explain their functions.
-
Review the different ways in which cash can increase or decrease in a firm. Use the accounting equation to support your answer. What are some of the characteristics of a firm with a long operating...
-
What is the basic goal of financial management with respect to capital structure? Is there an easily identifiable capital structure that will maximize the value of the firm? Why or why not?
-
ABC plc is comparing two different capital structures. Plan I would result in 1,100 shares of stock and 16,500 in debt. Plan II would result in 900 shares of stock and 27,500 in debt, on which it...
-
In the aftermath of the global financial crisis in the late 2000s, many companies sought to bring their leverage ratios down to much lower levels. In 2012, Lloyds Banking Group began to repurchase...
-
A warrant gives its owner the right to purchase three shares of equity at an exercise price of 32 Swedish krona per share. The current market price of the equity is 39 Swedish krona. What is the...
-
The not-for-profit organization Accountants Rule has a mission to promote the accounting profession in the local community. It is heavily supported by local accounting firms and businesses seeking to...
-
Clark, PA, has been engaged to perform the audit of Kent Ltd.s financial statements for the current year. Clark is about to commence auditing Kents employee pension expense. Her preliminary enquiries...
-
Explain how the conversion feature of convertible debt has a value (a) To the issuer and (b) To the purchaser.
-
What are the arguments for giving separate accounting recognition to the conversion feature of debentures?
-
Archer Company issued $4,000,000 par value, 7% convertible bonds at 99 for cash. The net present value of the debt without the conversion feature is $3,800,000. Prepare the journal entry to record...
-
Joanna, a head of investment manager holds a portfolio with a current value of RM20 million. Joanna fear that the market might be heading for a short-term volatility and wishes to enter the KLCI...
-
Balance sheet of High Capital Bank Capital Bank Assets $ Liabilities Balance sheet of Los Liabilities $ Assets $ A $ Reserves 8 m Deposits 90 Reserves 10 m Deposits 94 m Loans 92 m Equity Capital...
-
What is the Present Value (intrinsic value) of the stock today (Po)? If Stock A has a market price today of 42,000 JPY and Stock B has a market price of 50,000 today are they overvalued or...
Study smarter with the SolutionInn App