UESTION 1 ‘Average useful life’, ‘Average age of PPE


Question Description:

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UESTION 1 ‘Average useful life’, ‘Average age of PPE assets’ and ‘Asset Turnover’ are three measures that decision makers can use to analyse the PPE (Property, Plant & Equipment) assets of entities. Fresh Food Ltd and Cheap Food Ltd operate in the same industry. Each entity depreciates its PPE (Property, Plant & Equipment) assets using the straight line approach. An investigation of their financial statements reveals the following information: (Amounts in millions) Fresh Food LtdCheap Food Ltd Sales$ 22,653$ 33,812 Total Assets (Average)22,08836,167 Accumulated Depreciation2,7014,359 Depreciation Expense381697 Cost of Plant Assets (Average)7,71510,237 Required: What conclusion concerning the management of plant assets can be drawn from these data? (word limit: 180 – 240 words)

Answer

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