Evaluate the disclosures in the notes that accompany the financial statements of these six firms. Which are the most informative? The least informative? Why?
Are the machinery and equipment useful life disclosures by these six firms informative enough for an analyst to determine whether the useful lives are reasonable relative to each other? Explain.
Using the information in the case, or any other information, estimate the average age of machinery and equipment at these six firms.
How much flexibility do these firms have in the amount of depreciation they allocate to inventory? Suppose Intel sold and produced 40% less than planned at the beginning of a year. How would that influence the depreciation allocated to inventory and the depreciation that Intel reported as an expense on its income statement? Suppose Intel sold 40% less than planned at the beginning of a year but produced what the amount it planned.
How would that influence the depreciation allocated to inventory and the depreciation that Intel reported as an expense on its income statement?
Should the firms, in this case, consider depreciation costs when they set prices? Explain.
Compare the four firms using the information in Exhibit 1.