accounting

Accounting II 5

Running Head: Accounting II

Financial Statements

Annual report of Transdigm group incorporation selected for analysis:

Balances of property and equipment at the company’s yearend of Transdigm group incorporation selected for research are:

Property and equipment of Transdigm group incorporation include:

Particulars	2013(Dollars in millions)	2012(Dollars in millions)
Land	$44103	$39685
Building and improvements	99115	78631
Machinery, equipment and other	208037	167435
Construction in progress	10895	10171
Total	362150	295922
Accumulated depreciation	(153186)	(123185)
Property, plant and equipment-Net	$208964	$172737

After referring to the notes of financial statements of Transdigm group incorporation information relating to depreciation is as follows:

Depreciation of property and equipment of Transdigm Group incorporation is calculated using Straight line method. And property, plant and equipment of company are stated at cost (Besley & Brigham, 2007).

The estimated useful life of asset is as follows:

Land improvements- From ten to twenty years

Buildings and improvements- From Five to Thirty years

Machinery and equipment- From two to ten years

Furniture and fixtures- From three to ten years.

Whenever there is indication of impairment, property and equipment are evaluated for impairment by determining whether carrying amount of property can be recovered with undiscounted projected cash flow from future cash flow operation in the remaining estimated useful life of the property. Impairment is the difference between carrying cost and recoverable amount of asset. If carrying cost exceed then there is indication of impairment (Besley & Brigham, 2007).

Kinds of intangible asset Transdigm group incorporation own are: Identifiable intangibles acquired (trade name, trademarks, order backlog, technology and other intangible asset) and goodwill. Trade names, trademarks and goodwill have indefinite useful life and are subjected to yearly impairment test. Fair value of asset is determined using discounted future cash inflow technique.

Particulars	2013 $ (Net)	2012($)
Technology	657814	617236
Order backlog	11319	1945
Other	8760	36815

Calculation of percentage of net fixed asset compared to total assets of Transdigm Group incorporation for two recent years (Besley & Brigham, 2007).

Formula for calculation is: Net fixed Asset/Total Asset

Particulars	Year 2013 Amount in $	Year 2012 ($)
Net property plant and equipment	$208964	$172737
Total asset	$ 362150	$295922
Percentage of net fixed asset to total asset	208964/362150=57.700%	172737/295922=58.37%

References

Besley, S. & Brigham, E. (2007). Essentials of Managerial Finance. Cengage Learning.