1. In the notes to the financial statements,Palfingerreportstheplant,propertyand equipment of the following Land and equipment, undeveloped buildings and investments, plant and machinery, and other plant, fixtures, fittings, and equipment. In other words, the reported equipment according to the notes of the financial statements includes all the equipment that is necessary to make the inventory that they sell such as the cranes.

2. Prepayments and assets under construction represents the expenses that have already been paid for and assets that have yet to be finished. As a result of the assets not being used completely, they are also not depreciating. The reclassification during 2007 stems from the allocation of depreciation from the newly completed projects that now have been put to use.

3. Palfingerdepreciatesitspropertyandequipmentbyusingstraight-linedepreciation over the prospective useful lives of the relevant assets. We see that there was an allocation of 8-50 years on buildings, 3-15 years on plant and machinery, and 3-10 years on fixtures, fittings, and equipment. This policy does not seem reasonable, as there is a short 8-year building useful life. However, Palfinger’s ROA and EPS ratios are heavily impacted as a result of this.

4. Palfingerhandledtheseexpendituresinsuchawaythatdepreciatedreplacements investments, and value enhanced investments that are capitalized and depreciated over the useful life. The alternative accounting treatment to this would be to just expense out the costs of renovations or value enhancing investments as opposed to buying new assets. This way, it is captured on the income statement and not on the balance sheet. Furthermore, no new charges will be allocated in assets.

5. a.)Accordingtothenotestotheconsolidatedfinancialstatements,Palingerbought $61,444 worth of new PPE in 2007.
b.) There was a change of $733 regarding