Question

# QUESTION 1 Question text Estimating Useful Life and Percent Used Up The property and equipment footnote...

QUESTION 1

Question text

Estimating Useful Life and Percent Used Up
The property and equipment footnote from the Deere & Company Equipment and Operations segment follows.
Property and Depreciation A summary of property and equipment at October 31 follows.

Useful Lives*
Property and Equipment (\$ millions) (Years) 2015 2014
*Weighted averages
Land \$114 \$120
Buildings and building equipment

23

3,682 3,037
Machinery and equipment

11

5,721 5,089
Dies, patterns, tools, etc

8

1,567 1,552
All other

5

875 889
Construction in progress 345 530
Total at cost 12,304 11,217
Less accumulated depreciation 5,846 5,694
Total \$6,458 \$5,523

Total property and equipment additions in 2015, 2014 and 2013 were \$666 million, \$1,016 million and \$1,158 million, and depreciation was \$692 million, \$696 million and \$637 million, respectively.

a. Compute the estimated useful life of Deere’s depreciable assets at year-end 2015.

Round answer to one decimal place.

years

b. Estimate the percent used up of Deere’s depreciable assets at year-end 2015.

Round answer to one decimal place (ex: 0.2345 = 23.5%)

%

a. Computation of estimated usefful life of depreciable assets.

Estimated useful life = Total Value of depreciable assets in 2015 / Total Depreciation expense

Total Depreciable assets value = Land & Building + Machinery + Dies, Patterns + All Other

= 3,682 + 5,721 + 1,567 + 875 = 11,845

Total Depreciation for 2015 = \$692 Million

Estimated useful life = 11,845 / 692 = 17.1 years

b. Percent used up = Total Accumulated Depreciation till 2015 / Value of Depreciable asset in 2015

= 5,846 / 11,845 = 0.49354 or 49.3%

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