/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q11-6BE Dickinson Inc. owns the followin... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 11: Q11-6BE (page 594)

Dickinson Inc. owns the following assets.

Asset

Cost

Salvage

Estimated useful life

A

\(70,000

\)7,000

10 years

B

50,000

5,000

5 years

C

82,000

4,000

12 years

Compute the composite depreciation rate and the composite life of Dickinson鈥檚 assets.

Short Answer

Expert verified

Answer

Composite rate = 10.8%

Composite life = 8.5 years

Step by step solution

01

Step-by-Step SolutionStep 1: Meaning of Composite Depreciation

Composite depreciation combines a group of depreciating assets into a single entity rather than treating each item separately. In simple words, it is the application of straight-line depreciation to a portfolio. If an asset is sold, a debit is made to cash, and a credit is made to fixed assets.

02

Computing the composite depreciation rate and the composite life of Dickinson’s assets

Asset

Calculation

Depreciation Expense

A

$6,300

B

9,000

C

6,500

$21,800

Working notes:

For the calculation, part uses the formula as follows:

顿别辫谤别肠颈补迟颈辞苍鈥塭虫辫别苍蝉别=颁辞蝉迟鈥塷蹿鈥塧蝉蝉别迟鈭�厂补濒惫补驳别鈥塿补濒耻别鲍蝉别蹿耻濒鈥塴颈蹿别

Calculating composite rate

颁辞尘辫辞蝉颈迟别鈥塺补迟别=罢辞迟补濒鈥塪别辫谤别肠颈补迟颈辞苍鈥塭虫辫别苍蝉别罢辞迟补濒鈥塩辞蝉迟鈥塷蹿鈥塧蝉蝉别迟=$21,800$202,000=10.8%

Calculation of composite life

颁辞尘辫辞蝉颈迟别鈥塴颈蹿别=罢辞迟补濒鈥塧蝉蝉别迟鈭�罢辞迟补濒鈥塻补濒惫补驳别鈥塿补濒耻别罢辞迟补濒鈥塪别辫谤别肠颈补迟颈辞苍鈥塭虫辫别苍蝉别=$202,000鈭�$16,000$21,800=$186,000$21,800=8.5鈥墆别补谤蝉

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

(Unit, Group, and Composite Depreciation) The certified public accountant is frequently called upon by management for advice regarding methods of computing depreciation. Of comparable importance, although it arises less frequently, is the question of whether the depreciation method should be based on consideration of the assets as units, as a group, or as having a composite life.

Instructions

  1. Briefly describe the depreciation methods based on treating assets as

(1) units and

(2) a group or as having a composite life.

  1. Present the arguments for and against the use of each of the two methods.
  2. Describe how retirements are recorded under each of the two methods.

For what reasons are plant assets retired? Define inadequacy, supersession, and obsolescence.

A building that was purchased on December 31, 2003, for $2,500,000 was originally estimated to have a life of 50 years with no salvage value at the end of that time. Depreciation has been recorded through 2017. During 2018, an examination of the building by an engineering firm discloses that its estimated useful life is 15 years after 2017. What should be the amount of depreciation for 2018?

Distinguish among depreciation, depletion, and amortization.

The following statement appeared in a financial magazine: 鈥淩RA鈥攐r Rah-Rah, as it鈥檚 sometimes dubbed鈥� has kicked up quite a storm. Oil companies, for example, are convinced that the approach is misleading. Major accounting firms agree.鈥� What is RRA? Why might oil companies believe that this approach is misleading?
See all solutions

Recommended explanations on Business Studies Textbooks

Actuarial Science in Business

Read Explanation

Finance Literacy (Business Studies)

Read Explanation

Human 91影视

Read Explanation

Startups

Read Explanation

Public Relations Business Studies

Read Explanation

Intermediate Accounting

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.