The 2016 income statement and balance sheet (excerpts) for BNSF Railway are below.
Continued next page
The footnotes to the financial statements included the following:
Property and equipment, net (in millions), and the corresponding ranges of estimated useful lives were as follows:
Required:
a. What proportion of total assets, does BNSF hold as property and equipment in 2016 and 2015? Does this surprise you?
b. Compute property and equipment turnover for 2016 and 2015. Property and equipment, net for 2014 was $55,806 million. Explain this ratio.
c. By what percentage are the assets 'used up' at year-end 2016? What implication does this ratio have for future cash flows at BNSF?
d. Estimate the useful life on average for the BNSF depreciable assets at year-end 2016. Which of the assets listed in the footnote explain this estimated useful life?

Question

The 2016 income statement and balance sheet (excerpts) for BNSF Railway are below. 
   Continued next page
The footnotes to the financial statements included the following:
Property and equipment, net (in millions), and the corresponding ranges of estimated useful lives were as follows:
  Required: 
a. What proportion of total assets, does BNSF hold as property and equipment in 2016 and 2015? Does this surprise you?
b. Compute property and equipment turnover for 2016 and 2015. Property and equipment, net for 2014 was $55,806 million. Explain this ratio.
c. By what percentage are the assets 'used up' at year-end 2016? What implication does this ratio have for future cash flows at BNSF?
d. Estimate the useful life on average for the BNSF depreciable assets at year-end 2016. Which of the assets listed in the footnote explain this estimated useful life?

Quizplus · Accepted Answer

The Answer of The 2016 income statement and balance sheet (excerpts) for BNSF Railway are below. 
   Continued next page
The footnotes to the financial statements included the following:
Property and equipment, net (in millions), and the corresponding ranges of estimated useful lives were as follows:
  Required: 
a. What proportion of total assets, does BNSF hold as property and equipment in 2016 and 2015? Does this surprise you?
b. Compute property and equipment turnover for 2016 and 2015. Property and equipment, net for 2014 was $55,806 million. Explain this ratio.
c. By what percentage are the assets 'used up' at year-end 2016? What implication does this ratio have for future cash flows at BNSF?
d. Estimate the useful life on average for the BNSF depreciable assets at year-end 2016. Which of the assets listed in the footnote explain this estimated useful life?

The 2016 Income Statement and Balance Sheet (Excerpts) for BNSF