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Fixed Assets and
Intangible Assets
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After studying this chapter, you should
be able to:
1. Define, classify, and account for the
cost of fixed assets.
2. Compute depreciation, using the
following methods: straight-line
method, units-of-production method,
and double-declining-balance
method.
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After studying this chapter, you should
be able to:
3. Journalize entries for the disposal of
fixed assets.
4. Compute depletion and journalize the
entry for depletion.
5. Describe the accounting for
intangible assets, such as patents,
copyrights, and goodwill.
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After studying this chapter, you should
be able to:
6. Describe how depreciation expense is
reported in an income statement, and
prepare a balance sheet that includes
fixed assets and intangible assets.
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Objective 1
10-1
Define, classify,
and account for the
cost of fixed assets.
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Nature of Fixed Assets
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10-1
Fixed assets are long-term or
relatively permanent assets. They are
tangible assets because they exist
physically. They are owned and used
by the business and are not offered for
sale as part of normal operations.
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Assets
asofaTotal
Percent
FixedFixed
Assets as
a Percent
Assets—
Selected
Companies
of Total
Assets—Selected
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10-1
Companies
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Classifying Costs
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10-1
Is the purchased
item long-lived?
yes
no
Is the asset used in a
productive purpose?
yes
Fixed Assets
Expense
no
Investment
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Cost of Acquiring Fixed Assets
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10-1
LAND
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Purchase price
Sales taxes
Permits from government agencies
Broker’s commissions
Title fees
Surveying fees
Delinquent real estate taxes
Razing or removing unwanted
buildings, less any salvage
 Grading and leveling
 Paving a public street bordering the
land
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Cost of Acquiring Fixed Assets
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
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BUILDING
Architects’ fees
Engineers’ fees
Insurance costs incurred during construction
Interest on money borrowed to finance
construction
Walkways to and around the building
Sales taxes
Repairs (purchase of existing building)
Reconditioning (purchase of existing
building)
Modifying for use
Permits from government agencies
10-1
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Cost of Acquiring Fixed Assets
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MACHINERY AND
EQUIPMENT
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Sales taxes
Freight
Installation
Repairs (purchase of used
equipment)
 Reconditioning (purchase
of used equipment)
 Insurance while in transit
 Assembly
10-1
 Modification for user
 Testing for use
 Permits from government
agencies
LAND
IMPROVEMENT
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
Trees and shrubs
Fences
Outdoor lighting
Paved parking areas
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10-1
Cost of Acquiring Fixed Assets Excludes:
 Vandalism
 Mistakes in installation
 Uninsured theft
 Damage during unpacking
and installing
 Fines for not obtaining proper
permits from government
agencies
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Capital and Revenue Expenditures
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10-1
Expenditures that benefit only the
current period are called revenue
expenditures. Expenditures that
improve the asset or extend its useful
life are capital expenditures.
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REVENUE
EXPENDITURES
CAPITAL
EXPENDITURES
Normal and
ordinary repairs
and maintenance
1) Additions
2) Improvements
3) Extraordinary
repairs
10-1
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Ordinary Maintenance and Repairs
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10-1
On April 9, the firm paid $300 for a
tune-up of a delivery truck.
Apr. 9 Repairs and Maintenance Exp.
Cash
300 00
300 00
This is a revenue expenditure
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Asset Improvements
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10-1
On May 4, a $5,500 hydraulic lift was installed on
the delivery truck to allow for easier and quicker
loading of heavy cargo.
May 4 Delivery Truck
Cash
5 500 00
5 500 00
This is a capital expenditure
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Extraordinary Repairs
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10-1
The engine of a forklift that is near the end of its
useful life is overhauled at a cost of $4,500, which
extends its useful life eight years. Work on the
forklift was completed on Oct. 14.
Oct. 14 Accum. Depreciation—Forklift
Cash
4 500 00
4 500 00
This is a capital expenditure
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Capital or Revenue Expenditure
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10-1
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10-1
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Example Exercise 10-1
On June 18 GTS Co. paid $1,200 to upgrade a
hydraulic lift and $45 for an oil change for one of
its delivery trucks. Journalize the entries for the
hydraulic lift upgrade and oil change expenditures.
Follow My Example 10-1
June 18 Delivery Truck
1,200
Cash
1,200
18 Repairs and Maintenance Exp.
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Cash
45
For Practice: PE 10-1A, PE 10-1B
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Leasing Fixed Assets
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10-1
A capital lease is accounted
for as if the lessee has, in fact,
purchased the asset. The
asset is then amortized over
the life of the capital lease.
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Leasing Fixed Assets
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10-1
A lease that is not
classified as a capital
lease for accounting
purposes is classified as
an operating lease (an
operating leases is treated
as an expense).
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Objective 2
10-2
Compute depreciation using the
following methods: straight-line
method, units-of-production method,
double-declining-balance method.
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Accounting for Depreciation
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10-2
Over time, fixed assets such as
equipment, buildings, and land
improvements lose their ability to
provide services. The periodic
transfer of the cost of fixed assets to
expense is called depreciation.
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Physical and Functional
Depreciation
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10-2
Physical depreciation occurs from wear
and tear while in use and from the
action of the weather Functional
depreciation occurs when a fixed asset
is no longer able to provide services at
the level for which it was intended.
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Factors in Computing Depreciation
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10-2
The three factors in determining the
amount of depreciation expense to be
recognized each period are: (a) the fixed
asset’s initial cost, (b) its expected useful
life, and (c) its estimated value at the end
of the useful life.
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Residual Value
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10-2
The fixed asset’s estimated value at
the end of its useful life is called the
residual value, scrap value, salvage
value, or trade-in value. A fixed
asset’s residual value and its expected
useful life must be estimated at the
time the asset is placed in service.
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10-2
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Exhibit 5: Use of Depreciation
Methods
7%
10-2
3%
2%
Straight-line
Units-of-production
Double-decliningbalance
Other
88%
Source: Accounting Trends & Techniques, 59th ed., American
Institute of Certified Public Accountants, New York, 2005.
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10-2
Straight-Line Method
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The straight-line method provides
for the same amount of
depreciation expense for each year
of the asset’s useful life.
Cost – estimated residual value
Annual depreciation =
Estimated life
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10-2
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A depreciable asset cost $24,000. Its
estimated residual value is $2,000 and
its estimated life is 5 years.
Cost – estimated residual value
Annual depreciation =
Estimated life
Annual depreciation = $24,000 – $2,000
5 years
Annual depreciation = $4,400
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10-2
The straight-line method is
widely used by firms because it
is simple and it provides a
reasonable transfer of cost to
periodic expenses if the asset is
used about the same from
period to period.
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10-2
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Example Exercise 10-2
Equipment that was acquired at the beginning of the year
at a cost of $125,000 has an estimated residual value of
$5,000 and an estimated useful life of 10 years.
Determine the (a) depreciable cost, (b) straight-line rate,
and (c) annual straight-line depreciation.
Follow My Example 10-2
(a) $120,000 ($125,000 – $5,000)
(b) 10% = (1/10)
(c) $12,000 ($120,000 x 10%) or ($120,000 ÷ 10 years)
For Practice: PE 10-2A, PE 10-2B
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Units-of-Production Method
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10-2
The units-of-production method provides
for the same amount of depreciation
expense for each unit produced or each
unit of capacity used by the asset.
Cost – estimated residual value
Unit depreciation =
Estimated hours, units, etc.
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10-2
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A depreciable asset cost $24,000. Its
estimated residual value is $2,000 and
its expected to have an estimated life
of 10,000 operating hours.
Cost – estimated residual value
Hourly depreciation =
Estimated hours
$24,000 – $2,000
Hourly depreciation =
10,000 estimated hours
Hourly depreciation = $2.20 hourly depreciation
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10-2
The units-of-production method
is more appropriate than the
straight-line method when the
amount of use of a fixed asset
varies from year to year.
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10-2
Example Exercise 10-3
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Equipment acquired at a cost of $180,000 has an
estimated residual value of $10,000, an estimated useful
life of 40,000 hours, and was operated 3,600 hours
during the year. Determine the (a) depreciable cost, (b)
depreciation rate, and (c) the units-of-production
depreciation for the year.
Follow My Example 10-3
(a) $170,000 ($180,000 – $10,000)
(b) $4.25 per hour ($170,000/40,000 hours)
(c) $15,300 (3,600 hours x $4.25)
For Practice: PE 10-3A, PE 10-3B
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Double-Declining-Balance Method
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10-2
The double-decliningbalance method provides
for a declining periodic
expense over the estimated
useful life of the asset.
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10-2
A double-declining balance rate is
determined by doubling the straightline rate. A shortcut to determining
the straight-line rate is to divide one
by the number of years (1/5 = .20).
Hence, using the double-decliningbalance method, a five-year life
results in a 40 percent rate (.20 x 2).
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10-2
For the first year, the cost of the asset
is multiplied by 40 percent. After the
first year, the declining book value of
the asset is multiplied 40 percent.
Continuing with the example where
the fixed asset cost $24,000 and has
an expected residual value of $2,000,
a table can be built.
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Book Value
Beginning
Year of Year
1
$24,000
Rate
Annual
Deprec. Book Value
Deprec. Year-End Year-End
40%
$9,600
10-2
$24,000 x .40
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Book Value
Beginning
Year of Year
1
2
$24,000
14,400
Rate
Annual
Deprec. Book Value
Deprec. Year-End Year-End
40%
40%
$9,600
5,760
$9,600
10-2
$14,400
$14,400 x .40
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Book Value
Beginning
Year of Year
1
2
$24,000
14,400
Rate
Annual
Deprec. Book Value
Deprec. Year-End Year-End
40%
40%
$9,600
5,760
$9,600
15,360
10-2
$14,400
8,640
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Book Value
Beginning
Year of Year
1
2
3
$24,000
14,400
8,640
Rate
Annual
Deprec. Book Value
Deprec. Year-End Year-End
40%
40%
40%
$9,600
5,760
3,456
$9,600
15,360
18,816
10-2
$14,400
8,640
5,184
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Book Value
Beginning
Year of Year
1
2
3
4
$24,000
14,400
8,640
5,184
Rate
Annual
Deprec. Book Value
Deprec. Year-End Year-End
40%
40%
40%
40%
$9,600
5,760
3,456
2,074
$9,600
15,360
18,816
20,890
10-2
$14,400
8,640
5,184
3,110
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Book Value
Beginning
Year of Year
1
2
3
4
5
$24,000
14,400
8,640
5,184
3,110
Rate
Annual
Deprec. Book Value
Deprec. Year-End Year-End
40%
40%
40%
40%
40%
$9,600
5,760
3,456
2,074
1,244
$9,600
15,360
18,816
20,890
22,134
10-2
$14,400
8,640
5,184
3,110
1,866
DEPRECIATION STOPS WHEN
STOP
BOOK VALUE EQUALS
RESIDUAL VALUE!
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Book Value
Beginning
Year of Year
1
2
3
4
5
Rate
$24,000
40%
14,400
40%
8,640
40%
5,184
40%
3,110 – $2,000
10-2
Annual
Deprec. Book Value
Deprec. Year-End Year-End
$9,600
5,760
3,456
2,074
1,110
“Forced”
annual
depreciation
$9,600
15,360
18,816
20,890
22,000
$14,400
8,640
5,184
3,110
2,000
Desired
ending book
value
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10-2
Example Exercise 10-4
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Equipment that was acquired at the beginning of the year
at a cost of $125,000 has an estimated residual value of
$5,000 and an estimated useful life of 10 years.
Determine the (a) depreciable cost, (b) doubledeclining-balance rate, and (c) double-declining balance
depreciation for the first year.
Follow My Example 10-4
(a) $120,000 ($125,000 – $5,000)
(b) 20% [(1/10) x2]
(c) $25,000 ($125,000 x 20%)
For Practice: PE 10-4A, PE 10-4B
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Comparing
Depreciation Methods
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10-2
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Comparing
Depreciation Methods
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10-2
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Depreciation for Federal Income Tax
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10-2
The Internal Revenue Code
specifies the Modified Accelerated
Cost Recovery System (MACRS)
for use by businesses in computing
depreciation for tax purposes.
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10-2
MACRS specifies eight classes of
useful life and depreciation rates for
each class. The two most common
classes are the 5-year class (includes
automobiles and light duty trucks)
and the 7-year class (includes most
machinery and equipment).
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Revising Depreciation Estimates
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10-2
A machine purchased for $140,000 was
originally estimated to have a useful life of five
years and a residual value of $10,000. The
asset has been depreciated for two years using
the straight-line method.
Annual
$140,000 – $10,000
Depreciation (S/L) =
5 years
Annual
$26,000 per year
Depreciation (S/L) =
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10-2
At the end of two years, the asset’s book value
is $88,000, determined as follows:
Asset cost
$140,000
Less accumulated depreciation
($26,000 per year x 2 years)
52,000
Book value, end of second year $ 88,000
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During the third year, the company estimates
10-2
that the remaining useful life is eight years
(instead of three) and that the residual value is
$8,000 (instead of $10,000). Depreciation
expense for each of the remaining eight year is
determined as follows:
Book value, end of second year
Less revised estimated residual value
Revised remaining depreciation cost
Revised annual depreciation expense
($80,000 ÷ 8 years)
$88,000
8,000
$80,000
$10,000
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10-2
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Example Exercise 10-5
A warehouse with a cost of $500,000 has an estimated
residual value of $120,000, an estimated useful life of
40 years, and is depreciated by the straight-line method.
(a) Determine the amount of annual depreciation. (b)
Determine the book value at the end of the 20th year of
use. (c) If at the start of the 21st year it is estimated that
the remaining life is 25 years and that the residual value
is $150,000, determine the depreciation expense for
each of the remaining 25 years.
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10-2
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Follow My Example 10-5
a. $9,500 [($500,000 – $120,000)/40]
b. $310,000 [$500,000 – ($9,500 x 20)]
c. $6,400 [310,000 – $150,000)/25]
For Practice: PE 10-5A, PE 10-5B
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Objective 3
10-3
Journalize entries
for the disposal of
fixed assets.
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Discarding Fixed Assets
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10-3
A piece of equipment acquired at a cost of
$25,000 is fully depreciation. On February
14, the equipment is discarded.
Feb. 14 Accumulated Depr.—Equipment
Equipment
To write off equipment
25 000 00
25 000 00
discarded.
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10-3
Equipment costing $6,000 is depreciated at an
annual straight-line rate of 10%. After the
adjusting entry, Accumulated Depreciation—
Equipment had a $4,750 balance. The
equipment was discarded on March 24.
Mar. 24 Depreciation Expense—Equipment
Accum. Depr.—Equipment
To record current
depreciation on
equipment discarded.
150 00
150 00
$600 x 3/12
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10-3
The discarding of the equipment is then
recorded by the following entry:
Mar. 24 Accum. Depreciation—Equipment
Loss on Disposal of Fixed Assets
Equipment
To write off equipment
discarded.
4 900 00
1 100 00
6 000 00
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Selling Fixed Assets
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10-3
Equipment costing $10,000 is depreciated at an
annual straight-line rate of 10%. The equipment is
sold for cash on October 12. Accumulated
Depreciation (last adjusted December 31) has a
balance of $7,000 and needs to be updated.
Oct. 12 Depreciation Expense—Equipment
Accum. Depr.—Equipment
To record current
depreciation on
equipment sold.
750 00
750 00
$10,000 x ¾
x10%
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Assumption 1
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10-3
The equipment is sold on October
12 for $2,250. No gain or loss.
Oct. 12 Cash
Accum. Depreciation—Equipment
Equipment
Sold equipment at book
value.
2 250 00
7 750 00
10 000 00
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Assumption 2
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10-3
The equipment is sold on October 12
for $1,000; a loss of $1,250.
Oct. 12 Cash
Accum. Depreciation—Equipment
Loss on Disposal of Fixed Assets
Equipment
Sold equipment at a loss.
1 000 00
7 750 00
1 250 00
10 000 00
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Assumption 3
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10-3
The equipment is sold on October 12
for $2,800; a gain of $550.
Oct. 12 Cash
Accum. Depreciation—Equipment
Equipment
Gain on Disp. of Fixed Assets
Sold equipment at a gain.
2 800 00
7 750 00
10 000 00
550 00
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10-3
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Example Exercise 10-6
Equipment was acquired at the beginning of year at a
cost of $91,000. The equipment was depreciated using
the straight-line method based upon an estimated useful
life of 9 years and an estimated residual value of
$10,000.
a. What was the depreciation for the first year?
b. Assuming the equipment was sold at the end of the
second year for $78,000, determine the gain or loss on
sale of the equipment.
c. Journalize the entry to record the sale.
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10-3
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Follow My Example 10-6
a. $9,000 [($91,000 – $10,000)/9]
b. $5,000 gain; $78,000 – [$91,000 – ($9,000 x 2)]
c. Cash
78,000
Accum. Depreciation—Equipment 18,000
Equipment
91,000
Gain on Disposal of Fixed Assets
5,000
For Practice: PE 10-6A, PE 10-6B
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Exchanging Fixed Assets
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10-3
When old equipment is traded for new
equipment, the seller often allows the buyer
a trade-in allowance for the old equipment
traded. The remainder, the boot, is either
paid in cash or recorded as a liability.
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10-3
IMPORTANT!
Gains on exchanges of similar
fixed assets are not recognized
for financial reporting purposes.
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10-3
On June 19, assume that new
equipment being purchased has a list
price of $5,000. The dealer allows a
trade-in allowance of $1,100 on the
old, similar equipment. The old
equipment cost $4,000 and has a
book value of $800.
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Two Methods of Determining Cost
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10-3
Method One
List price of new equipment
$5,000
Trade-in allowance
$1,100
Book value of old equipment
800
Unrecognized gain on exchange
(300)
Cost of new equipment
$4,700
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10-3
Method Two
Book value of old equipment
Cash paid at date of exchange
Cost of new equipment
$ 800
3,900
$4,700
Note that either method provides the same
cost for the new equipment.
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10-3
On June 19, equipment was
exchanged at a gain of $300.
June 19 Accum. Depreciation—Equipment
Equipment (new equipment)
Equipment (old equipment)
Cash
To record exchange of
equipment.
3 200 00
4 700 00
4 000 00
3 900 00
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Losses on Exchanges
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10-3
For financial reporting purposes, losses are
recognized on exchange of similar fixed
assets if the trade-in allowance is less than
the book value of the old equipment. On
September 7, new equipment was acquired
by trading in old equipment with a cost of
$7,000 and a book value of $2,400, and
giving a cash payment of $8,000.
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Cost of old equipment
$7,000
Accumulated depreciation at date of exchange
Book value at September 7, date of exchange
Trade-in allowance on old equipment
Loss on exchange
Sept 7
Accum. Depreciation—Equipment
Equipment
Loss on Disposal of Fixed Assets
Equipment
Cash
To record exchange of
equipment with loss.
10-3
4,600
$2,400
2,000
$ 400
4 600 00
10 000 00
400 00
7 000 00
8 000 00
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10-3
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Example Exercise 10-7
On the first day of the fiscal year, a delivery truck with a
list price of $75,000 was acquired in exchange for an
old delivery truck and $63,000 cash. The old truck had
a cost of $50,000 and accumulated depreciation of
$39,500.
a. Determine the cost of the new truck for financial
reporting purposes.
b. Journalize the entry to record the exchange.
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10-3
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Follow My Example 10-7
a. $73,500
List price of new truck
Trade-in allowance on old truck
($75,000 – $63,000)
Book value of old truck
($50,000 – $39,500)
Unrecognized gain on exchange
Cost of new truck
$75,000
$12,000
10,500
(1,500)
$73,500
or
(Continued)
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10-3
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Follow My Example 10-7
Book value of old truck ($50,000 –
$39,5000)
Plus cash paid at date of exchange
Cost of new truck
b. Truck (new)
Accumulated Depreciation—
Truck (old)
Truck (old)
Cash
$10,500
63,000
$73,500
73,500
39,500
50,000
63,000
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For Practice: PE 10-7A, PE 10-7B
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Objective 4
10-4
Compute depletion
and journalize the
entry for depletion.
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Natural Resources
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10-4
The process of
transferring the cost of
natural resources to an
expense account is called
depletion.
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Recording Depletion
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10-4
A business paid $400,000 for the
mining rights to a mineral deposit
estimated at 1,000,000 tons of ore.
The depletion rate is $0.40 per ton
($400,000/1,000,000 tons).
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10-4
If 90,000 tons are mined during the
year, an adjusting entry is required
at the end of the accounting period.
Adjusting Entry
Dec. 31 Depletion Expense
Accumulated Depletion
Depletion of mineral
deposit.
36 000 00
36 000 00
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10-4
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Example Exercise 10-8
Earth’s Treasures Mining Co. acquired mineral rights for
$45,000,000. The mineral deposit is estimated at
50,000,000 tons. During the current year, 12,600,000
tons were mined and sold.
a. Determine the depletion rate.
b. Determine the amount of depletion expense for the
current year.
c. Journalize the adjusting entry on December 31 to
recognize the depletion expense.
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10-4
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Follow My Example 10-8
a. $0.90 per ton = $45,000,000/50,000,000 tons
b. $11,340,000 – (12,600,000 tons x $0.90 per ton)
c. Dec. 31 Depletion Expense
11,340,000
Accumulated
Depletion
11,340,000
Depletion of
mineral deposit.
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For Practice: PE 10-8A, PE 10-8B
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Objective 5
10-5
Describe the accounting
for intangible assets,
such patents, copyrights,
and goodwill.
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Intangible Assets
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10-5
Patents, copyrights, trademarks, and
goodwill are long-lived assets that
are useful in the operations of a
business and not held for sale. These
assets are called intangible assets
because they do not exist physically.
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10-5
The exclusive right granted by the
federal government to
manufacturers to produce and sell
goods with one or more unique
features is a patent. These rights
continue in effect for 20 years.
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10-5
Journalizing Amortization of a
Patent
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At the beginning of its fiscal year, a business
acquires a patent right for $100,000. Its
remaining useful life is estimated at 5 years.
Adjusting Entry
Dec. 31 Amortization Expense—Patents
Patents
Patent amortization
($100,000/5).
20 000 00
20 000 00
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Adjusting Entry
Dec. 31 Amortization Expense—Patents
Patents
Patent amortization
($100,000/5).
10-5
20 000 00
20 000 00
Because a patent (and other intangible assets) does not
exist physically, it is acceptable to credit the asset. This
approach is different from physical fixed assets that
require the use of a contra asset account.
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Copyright
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10-5
The exclusive right granted by the
federal government to publish and
sell a literary, artistic, or musical
composition is a copyright. A
copyright extends for 70 years
beyond the author’s death.
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Trademark
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10-5
A trademark is a unique name, term, or
symbol used to identify a business and its
products. Most businesses identify their
trademarks with ® in their advertisements
and on their products. Trademarks can be
registered for 10 years and can be
renewed every 10 year period thereafter.
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Goodwill
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10-5
In business, goodwill refers to an
intangible asset of a business that is
created from such favorable factors
as location, product quality,
reputation, and managerial skill.
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10-5
Generally accepted accounting principles
permit goodwill to be recorded in the
accounts only if it is objectively
determined by a transaction.
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Impaired Goodwill
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10-5
A loss should be recorded if the business
prospects of the acquired firm (and the acquired
goodwill) become significantly impaired.
Mar. 19 Loss from Impaired Goodwill
Goodwill
Impaired goodwill.
50 000 00
50 000 00
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10-5
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Example Exercise 10-9
On December 31 it was estimated that goodwill of
$40,000 was impaired. In addition, a patent with an
estimated useful economic life of 12 years was acquired
for $484,000 on July 1.
a. Journalize the adjusting entry on December 31,
for the impaired goodwill.
b. Journalize the adjusting entry on December 31
for the amortization of the patent rights.
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10-5
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Follow My Example 10-9
a. Dec. 31 Loss from Impaired Goodwill 40,000
Goodwill
40,000
Impaired goodwill.
b. Dec. 31 Amortization Expense—Patents 3,500
Patents
3,500
Amortized patent rights
[($84,000/12) x (6/12)].
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For Practice: PE 10-9A, PE 10-9B
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Objective 6
Describe how depreciation
expense is reported in an
income statement, and
prepare a balance sheet
that includes fixed assets
and intangible assets.
10-6
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10-6
 The amount of each major class of fixed
assets should be disclosed in the balance
sheet or in notes.
 The fixed assets may be shown at their net
amount.
Office equipment
Less accumulated depreciation
Net book value
$125,750
86,300
$ 39,450
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10-6
 The cost of mineral rights or ore deposits is
normally shown as part of the fixed asset
section of the balance sheet. The related
accumulated depletion should also be
disclosed.
 Intangible assets are usually reported (net of
amortization) in the balance sheet in a
separate section immediately following fixed
assets.
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Fixed Assets and Intangible
Assets in the Balance Sheet
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10-6
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Fixed Asset Turnover Ratio
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10-6
One measure of the revenue-generating
efficiency of fixed assets is the fixed asset
turnover ratio. It measures the number of
dollars of revenue earned per dollar of fixed
assets and is computed as follows:
Fixed Asset
Turnover Ratio
=
Revenue
Average Book Value of
Fixed Assets
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Financial Analysis and Interpretation
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10-6
For Marriott International, Inc. (in millions)
Revenue
Fixed Asset
=
Turnover Ratio
Average Book Value of
Fixed Assets
$11,550
Fixed Asset
=
Turnover Ratio
($2,341 + 2,389)/2
Fixed Asset
=
Turnover Ratio
4.88
Conclusion: For every dollar of fixed assets,
Marriott earns $4.88 of revenue.
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