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Basic Question 2 of 5
An analyst gathers the following information ($ millions) about three companies operating in the same industry:
1 | 10.8 | 58.9
2 | 27.8 | 80.3
3 | 33.6 | 128.8
B. 2
C. 3
Company | Annual Depreciation Expense | Accumulated Depreciation
1 | 10.8 | 58.9
2 | 27.8 | 80.3
3 | 33.6 | 128.8
Although the companies have different levels of sales and assets, they are all experiencing sales growth at about the same rate and use the same type of equipment in the manufacturing process. All three companies also use the same depreciation method. Which company is least likely to require major capital expenditures in the near future? Company ______
A. 1
B. 2
C. 3
User Contributed Comments 3
| User | Comment |
|---|---|
| davidkhang | Tricky... kind of... |
| Inaganti6 | Welcome to a CFA world |
| dbedford | The way I see it is: The more depreciation periods they've had the more likely they are going to have to replace. So, with company 1 they've had about 6 periods of depreciation; company 3 has had about 4 and company 2 has had a little under 3 . So the answe should be B |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
analyze and interpret financial statement disclosures regarding property, plant, and equipment and intangible assets
CFA® 2024 Level I Curriculum, Volume 2, Module 7.