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 life (in years) 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 life (in years) for these assets is

Quizplus · Accepted Answer

The composite life is the weighted average of the individual asset lives, using the total cost of each asset as the weight. The composite life is calculated as follows:Composite life = (Total cost of Machine A * Estimated life of Machine A + Total cost of Machine C * Estimated life of Machine C + Total cost of Machine M * Estimated life of Machine M) / (Total cost of Machine A + Total cost of Machine C + Total cost of Machine M)= (320,000 * 12 + 390,000 * 10 + 225,000 * 6) / (320,000 + 390,000 + 225,000)= 9.1 years

Use the Following Information for Questions a Schedule of Machinery

Use the Following Information for Questions
a Schedule of Machinery