HW No. 5 Answer the following questions from the textbook:
E6 - 35 Estimating Useful Life and Percent Used Up The property and equipment footnotes from the Deere & Company balance sheet follows The property and Depreciation A summary of property and equipment at October 31 follows:
Property and Equipment (millions) | Useful Lives (years) | 2010 | 2009 | Land | | $113 | $1,166 | Buildings and building equipment | 23 | 2,226 | 2,144 | Machinery and equipment | 11 | 3,972 | 3,826 | Dies, patterns, tool, etc. | 7 | 1,105 | 1,081 | All other | 5 | 685 | 672 | Construction in process | | 478 | 362 | Total at cost | | 8,579 | 8,501 | Less accumulated depression | | 4,856 | 4,744 | Total | | $3,723 | $3,457 | Required a. Compute the estimated useful life of Abbott Laboratories’ depreciable assets. How do you interpret this figure? b. Compute the estimated percent used up of Abbott Laboratories’ depreciable assets. How do you interpret this figure?
E7 – 33 Determining Bond Prices, Interest Rates, and Financial Statement Effects Deere& Company’s 2010 1o K reports the following footnotes relating to long-term debt for its equipment operations subsidiary. Deere’s borrowings include $300 million, 7.125% notes, due in 2031. Long-term borrowings at October 31 consisted of the following in millions of dollars:
Notes and debentures | 2010 | 2009 | 6.95% notes due 2014:($700 principal) Swapped $300 to | | | variable interest rate of 1.25%-2009 | $763 | $800 | 4.375% notes due 2019 | 750 | 750 | 7-1/2% debentures due 2022 | 105 | 105 | 6.55% debentures due 2028 | 200 | 200 | 5.375% notes due 2029 | 500 | 500 | 8.10% debentures due 2030 | 250 | 250 | 7.125% notes due 2031 | 300 | 300 | Other notes | 461 | 168 | Total | $3,329 | $3,073 |
A recent price quote from Yahoo! Finance Bond Center on Deere’s 7.125% notes follow.
