(i) For the following group of assets, compute the composite depreciation rate,

Question

(i) For the following group of assets, compute the composite depreciation rate, the composite life and the amount of depreciation recorded for the first year of ownership of the asset group, assuming that the group of assets was purchased on January 1:

Asset Original Cost Salvage Value Estimated Life in years

A $11,000 $ 500 5
B $ 7,000 $ 200 4
C $ 12,500 $ 800 3
D $16,000 $1,000 6


(ii) If Asset B is sold for $1,000 at the end of 3 years, what journal entry should be made? I need to answerthis question.

Composite life equals the total
depreciable cost divided by the total depreciation per year.

= $44,000 / $10,200 = 4.31 years.

Composite depreciation rate equals depreciation
per year divided by total historical cost.

=$10,200 / $46,500 = 22%

Dep Recorded for Year 1 = $10,200

Item (i) hs been completed, I need help with item (ii), please. Thank you

(n) depr. orig salvage est. life cost asset cost (oc) value (sv) in years oc - sv sv / n A $11,000 $500 5 $10,500 $2,100 B $7,000 $200 4 $6,800 $1,700 C $12,500 $800 3 $11,700 $3,900 D $16,000 $1,000 6 $15,000 $2,500 TOTAL $46,500 $2,500 4.31 $44,000 $10,200

Explanation / Answer

Purch Salvage Yrs Amt to depr purch $ minus salvage Yearly Dep A $10,000.00 $500.00 5 $9,500.00 $1,900.00 B $7,000.00 $200.00 4 $6,800.00 $1,700.00 C $12,500.00 $800.00 3 $11,700.00 $3,900.00 D $16,000.00 $1,000.00 6 $15,000.00 $2,500.00 Total Dep/yr $10,000.00 12.31.12 Deprec Exp 10000 Accum Dep 10000 . Total Accum Depr at beg of yr 2 $3,400.00 Cash $1,000.00 Accum Dep $1,700.00 Loss on Asset $800.00 Asset B $1,900.00 Purch price minus accum depr 7000-5100

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