Question

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.
Answer

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%)
Answer

%

Answer 1

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%