Chapter 3
Long-Term Assets
139
Case Study
CS-1 (
3
)
Canadian National Railway (CNR) and Canadian Pacific Railway (CP) are two companies in
the same industry. The relevant portions of their financial statements are provided on the
following pages.
Required
a) Using the financial statements provided on the following pages, complete the table for
CNR and CP for each item listed in the first column. For the last item, assume that each
company added $1 million of rails and calculate the amount of depreciation for one year.
(Hint: Assume that the rails are in first position. Use the average estimated years of service
life for CP.)
December 31, 2014
Item
CNR
CP
Net Assets
Method
Rate
Depreciation on $1MM
b) Why do you think CNR and CP use different rates of depreciation?
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