Below is selected information taken from the balance sheet of Huy Corporation as of 12/31/06. $\begin{array}{lrr}
&\underline{12 / 31 / 05}&\underline{12 / 31 / 06}\
\text { Land } & \$ 100,000 & \$ 100,000 \
\text { Machines } & \underline{80,000} & \underline{70,000} \
\text { Gross property, plant, \& equipment } & 180,000 & 170,000 \
\text { Accumulated depreciation } & \underline{25,000} & \underline{10,000} \
\text { Net property, plant, \& equipment } & \underline{\$ 155,000} & \underline{\$ 160,000} \
\text { Depreciation expense } & & \$ 5,000
\end{array}$

-The average total life span of Huy's depreciable assets as of 2006 is:
A)2 years.
B)7 years.
C)14 years.
D)34 years.

Question

Below is selected information taken from the balance sheet of Huy Corporation as of 12/31/06. $\begin{array}{lrr}
&\underline{12 / 31 / 05}&\underline{12 / 31 / 06}\
\text { Land } & \$ 100,000 & \$ 100,000 \
\text { Machines } & \underline{80,000} & \underline{70,000} \
\text { Gross property, plant, \& equipment } & 180,000 & 170,000 \
\text { Accumulated depreciation } & \underline{25,000} & \underline{10,000} \
\text { Net property, plant, \& equipment } & \underline{\$ 155,000} & \underline{\$ 160,000} \
\text { Depreciation expense } & & \$ 5,000
\end{array}$

-The average total life span of Huy's depreciable assets as of 2006 is:
A)2 years.
B)7 years.
C)14 years.
D)34 years.

Quizplus · Accepted Answer

The average total life span can be calculated by dividing the gross property, plant, and equipment by the depreciation expense. In this case, $170,000 / 5,000 = 34$ years. However, considering the accumulated depreciation adjustment, the correct calculation should be $ (170,000 - 10,000) / 5,000 = 32$ years, but the closest choice is 34 years.

Below Is Selected Information Taken from the Balance Sheet of Huy