The Following Information Was Taken from a Recent Annual Report

question 115

Essay

The following information was taken from a recent annual report of Harrison Company in millions:
$\begin{array}{|l|r|r|}\hline & \text { Current Year } & \text { Preceding Year } \\\hline \text { Land and buildings } & \$ 726 & \$ 361 \\\hline \text { Machinery, equipment, and internal-use software } & 595 & 470 \\\hline \text { Office furniture and equipment } & 94 & 81 \\\hline \text { Other fixed assets related to leases } & 760 & 569 \\\hline \text { Accumulated depreciation and amortization } & 894 & 644 \\\hline\end{array}$ Required:
1 Compute the book value of the fixed assets for the current year and the preceding year and explain the differences,if any.
2 Would you normally expect the book value of fixed assets to increase or decrease during the year?

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Definitions:

Set Up Cost

Expenses associated with preparing equipment or facilities for a task, such as a production run or a new process.

Holding Cost

The expenses associated with storing inventory, including warehousing, insurance, depreciation, and opportunity costs.

Strategic Advantage

A favorable position a company holds against its competitors, often resulting from implementing effective strategies.

Complex

Characterized by having numerous interconnected parts or elements, making something difficult to understand or analyze.