Use the following information for questions
A schedule of machinery owned by Dougan Co.is presented below: $$\begin{array} { l c c c }
& \text { Total Cost } & \begin{array} { c }
\text { Estimated } \
\text { Salvage Value }
\end{array} & \begin{array} { c }
\text { Estimated } \
\text { Life in Years }
\end{array} \
\hline \text { Machine A } & \$ 320,000 & \$ 20,000 & 12 \
\text { Machine C } & 390,000 & 30,000 & 10 \
\text { Machine M } & 225,000 & 15,000 & 6
\end{array}$$ Dougan computes depreciation by the composite method.
-The composite rate of depreciation (in percent) for these assets is

Question

Use the following information for questions 
A schedule of machinery owned by Dougan Co.is presented below: $$\begin{array} { l c c c } 
& \text { Total Cost } & \begin{array} { c } 
\text { Estimated } \
\text { Salvage Value }
\end{array} & \begin{array} { c } 
\text { Estimated } \
\text { Life in Years }
\end{array} \
\hline  \text { Machine A } & \$ 320,000 & \$ 20,000 & 12 \
\text { Machine C } & 390,000 & 30,000 & 10 \
\text { Machine M } & 225,000 & 15,000 & 6
\end{array}$$ Dougan computes depreciation by the composite method.
-The composite rate of depreciation (in percent) for these assets is

Quizplus · Accepted Answer

The composite rate of depreciation is calculated by dividing the total annual depreciation by the total cost of the assets. The total annual depreciation is the sum of the depreciation for each asset, which is calculated by dividing the difference between the cost and salvage value by the estimated life. The total cost of the assets is the sum of the costs of each asset.For Machine A, the annual depreciation is ($320,000 - $20,000) / 12 = $25,000.For Machine C, the annual depreciation is ($390,000 - $30,000) / 10 = $36,000.For Machine M, the annual depreciation is ($225,000 - $15,000) / 6 = $35,000.The total annual depreciation is $25,000 + $36,000 + $35,000 = $96,000.The total cost of the assets is $320,000 + $390,000 + $225,000 = $935,000.Therefore, the composite rate of depreciation is $96,000 / $935,000 = 10.27%.

Use the Following Information for Questions a Schedule of Machinery

Use the Following Information for Questions
a Schedule of Machinery