8.Gigi Inc. uses a composite method for depreciation and has the following for i

Question

8.Gigi Inc. uses a composite method for depreciation and has the following for its fleet of cars, trucks and trailers for 2015

Original            Salvage           Estimated        Depreciation

Asset               Cost                 Value                  Life               (Annual)

      Cars                $300,000         $30,000               3                  $90,000          

      Trucks             $700,000         $60,000               8                  $80,000

      Trailers            $1,000,000      $100,000             9                  $100,000

Calculate the composite depreciation rate

Calculate the composite life

Explanation / Answer

Composite depreciation rate = 2,70,000 / 20,00,000

= 13.5%

Composite life = 18,10,000 / 2,70,000

= 6.7 years

Asset Original cost Residual value Depreciable cost Estimated life Depreciation per year Cars $3,00,000 $30,000 $2,70,000 $3 $90,000 Trucks $7,00,000 $60,000 $6,40,000 $8 $80,000 Trailers $10,00,000 $1,00,000 $9,00,000 $9 $1,00,000 Total $20,00,000 $18,10,000 $2,70,000

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.