Watgreens is a drugstore chain operating more than 8,200 stores in 50 states, th

Question

Watgreens is a drugstore chain operating more than 8,200 stores in 50 states, the District of Columbia, Guam, and Puerto Rico. Walgreens typically builds rather than buys stores, so it can pick prime locations. Net property, plant, and equipment comprised almost 42% of Walgreens assets as of August 31, 2011. The company had the following on its August 31, 2011, balance sheet (S in millions): A footnote states that "depreciation is provided on a straight-line basis over the estimated useful lives of owned assets." Annual depreciation expense is approximately $804 million. Assume a zero salvage value for all of the assets. 1. Estimate the average useful life of Walgreens depreciable assets. 2. Estimate the average age of Walgreens depreciable assets on August 31, 2011.

Explanation / Answer

total company cost of fixed assets = $ 15,834 millions

annual depreciation of company assets under stright line basis = $ 804 millions

average useful life of walgreens depreciable assets = 15,834/804= 19.604 years

average age of depreciable assets as on august 31,2011= 4,308/804=5.358 years

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