Palfinger Ag Case Study

Palfingers AG Property, Plant, and Equipment a. ) Palfingers property would include the property that they collapse to store the forklifts and other large inventory that they have on. The equipment would include either equipment that is necessary to make the inventory that they sell such as the cranes. b. ) This weigh represents the inwardness of the plant, property, and equipment that Palfinger has. This number should be recorded as the historical damage that the plant, property and equipment was purchased at.This total number also has the total sum of amortized depreciation subtracted out to get the net amount of PP&E that is put on the eternal sleep sheet c. ) In the notes to the pecuniary statements, Palfinger reports the plant, property and equipment of the following knowledge base and equipment Undeveloped constructions and investments Plant and machinery Other plant, fixtures, fittings, and equipment Payments and assets under bodily structure d. Prepayments an d assets under construction represents set downs that have prepaid for and assets that havent been finished yet. Because the assets arent unblemished and havent been used, they arent being lowerd. The reclassification comes from allocation of depreciation from the pertly completed projects that now have been put to use. e. ) Palfinger depreciates its property and equipment by using straight-line depreciation over the prospective useful lives of the relevant assets.They allocate 8-50 eld on buildings, 3-15 years on plant and machinery, and 3-10 years on fixtures, fittings, and equipment. This constitution does not seem reasonable because there is a short 8-year building useful life. Because of this, Palfingers ROA and EPS ratios are heavily seismic disturbanceed. f. You can both depreciate replacements investments, and value enhancing investments that are capitalized and depreciated over the new useful life or original useful life.The alternative method to this would be to ju st expense out the costs of renovations or value enhancing investments. This way it is completely get ahead on the income statement, and is not shown on the balance sheet. g. ) i. According to the notes to the consolidated financial statements, Palinger bought $61,444 worth of new PPE in 2007. ii. There was a change of ($733) concerning political sympathies grants. According to IAS 20 government grants for property, plant, and equipment are presented as reductions of the acquisition and/or manufacturing costs.When these are deducted from the account, it lessens the amount depreciated during the life of the acquired assets. iii. disparagement expense for 2007 was $12,557. iv. Net guard value of total disposed PPE, was $1,501 (Derived from $13,799 $12,298) h. ) To derive the extend to or want Palfinger incurred, we compute their issuance from the sale of PPE $1,655 and subtract it from $1,501 (net book value). This gives us a total gain of $154. i. ) i. Straight Line Year Beg D ep. Exp Accum Dep. oddment Bal 1 $10,673 $1,880 $1,880 $8,793 2 8,793 1,880 3,760 6,913 3 6,913 1,880 5,640 5,033 4 5,033 1,880 7,520 3,153 5 3,153 1,880 9,400 1,273 ii. Double- declining- balance depreciation Year Beg Dep. Exp. Accum Dep. Ending Bal 1 $10,673 $4,269 $4,269 $6,404 2 6,404 2,562 6,831 3,842 3 3,842 1,537 8,368 2,305 4 2,305 922 9,290 1,383 5 1,383 110 9,400 1,273 . ) i. Net book value at block up of year 1 is $8,793. Less what you received on the sale $7,500. Gives you a governing body loss of $1,293 using the straight-line method of depreciation. You then add the disposal loss from the previous years depreciation $1,880, which results in a total income statement impact of $3,173. ii. Using double- declining method, the first year ending balance of $6,404 is subtracted form the proceeds of the sale netting in a gain of $1,096 on the disposal.Once this is subtracted form the previous years depreciation $4,269, you get a total income statement impact of $3,173. iii. The total income statement impact is scarce the same. The computations turn out to be identical because it is essentially a backwards way of computing the initial cost of the asset of $10,673, minus the proceeds from the sale $7,500, which both gives you $3,173. The difference between the two is perception. One reports a gain on disposals, while the other reports a loss. k. ) Palfinger Palfinger true cat Caterpillar 2007 2006 2007 2006 Net PPE 149,990 98,130 9,997 8,851 Total Assets 528,314 409,366 56,132 51,449 Common Size 28. 4% 24% 17. % 17. 2% Dep 12,557 9,980 1,797 1,602 Sales/Rev 695,623 585,205 41,962 38,869 Common Size 1. 8% 1. 7% 4. 3% 4. 1% This table shows that Palfinger has much more assets involved in PPE at 28. 4%, than does Caterpillar 17. 8%. l. ) Palfinger Palfinger Caterpillar Caterpillar 2007 2006 2007 2006 Sales or Rev 695,623 585,205 41,962 38,869 Avg. PPE 124,060 94,091 9,424 8,420 PPE turnover 5. 61 6. 22 4. 45 4. 2 disorder wen t down about 11% (5. 61/6. 22) for Palfinger, we also see the disrespect being less effective theyre still more good then Caterpillar by about 26% (5. 61/4. 45) in regards to PPE sales for every dollar spent. m. ) Depreciation, Amortization & Impairment expense1,960 Accumulated Depreciation & Impairment1,960 n. ) i. Due to the companies building location concept ii. Accumulated depreciation handicap1,755 Depreciation, Amortization, & impairment expense1,755 The credit is posted to an account the company has called revaluation reserve, if it is the initial compile up. iii. 2007 Net Sales $695,623 Avg. PPE Adjusted 124,060 (1,755 x 0. 5) = 123,183 Turnover Adjusted 5. 65 The ratio has changed 5. 61 to 5. 65, which is not a very significant difference. Recalculating the impact of the write offs compared to the total net PPE is considered a minimum change for the company.