Dollarama Inc is Canada s largest dollar store operator The

following #257
Dollarama Inc. is Canada’s largest dollar store operator. The following information is an extract
from Dollarama’s consolidated financial statements for the year ended February 2,
2014:Dollarama’s depreciation policies for its property and equipment state that:Property and
equipment are carried at cost and depreciated on a straight-line basis over the estimated useful
lives of the assets as follows:Store and warehouse equipment ..... 8 to 10 yearsVehicles
................... 5 yearsLeasehold improvements ......... Lease termComputer equipment .............. 5
yearsEstimates of useful lives, residual values and methods of depreciation are reviewed
annually. Any changes are accounted for prospectively as a change in accounting estimate. If
the expected residual value of an asset is equal to or greater than its carrying value,
depreciation on that asset is ceased. Depreciation is resumed when the expected residual value
falls below the asset’s carrying value. Gains and losses on disposal of an item of property and
equipment are determined by comparing the proceeds from disposal with the carrying amount of
the item and are recognized directly in the consolidated statement of comprehensive
income.Required:a. Determine the average age percentage of Dollarama’s property and
equipment. Compare this with the ratio determined for Danier in the chapter and identify which
company would be able to go longer without replacing its assets based on this ratio.b.
Determine the average age (in years) of Dollarama’s leasehold improvements. Compare this
with the ratio determined for Danier in the chapter and identify which company’s leased stores
are newer.c. Given that Dollarama estimates that its store and warehouse equipment will have
useful lives between 8 and 10 years, determine the annual straight-line depreciation rate that
Dollarama is using for its store and warehouse equipment.d. Explain, in your own words, how
Dollarama treats changes in the estimated useful lives, residual values, and methods of
depreciation for its property and equipment.e. Explain, in your own words, why Dollarama stops
depreciating assets when their expected residual value is equal to or greater than their carrying
amounts.f. If Dollarama’s net carrying amount for property and equipment was $250,612
thousand at its 2014 year end and $197,494 thousand at its 2013 year end and its sales
revenue was $2,064,676 thousand for the 2014 fiscal year, determine the company’s fixed
asset turnover ratio. Compare this with the ratio determined forDanier in the chapter and
comment on which company did a better job of using its long-term assets to generate
revenues.View Solution:
Dollarama Inc is Canada s largest dollar store operator The following

ANSWER
http://paperinstant.com/downloads/dollarama-inc-is-canada-s-largest-dollar-store-operator-the-
following/

1/1
Powered by TCPDF (www.tcpdf.org)