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Information for Everett Evacuators for 2015 and 2014 is presented below. Everett uses the straight-line depreciation...

Information for Everett Evacuators for 2015 and 2014 is presented below. Everett uses the straight-line depreciation method.

2015

2014

Non-current assets

$250 000

$190 000

Accumulated depreciation

100 000

85 000

Depreciation expense

62 500

47 500

Total revenues

1 000 000

900 000

Total assets

625 000

475 000

Using the data for 2015, determine the average useful life of Everett's non-current assets rounded to one decimal place.

1.6 years

4.0 years

2.5 years

4.7 years
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Answer #1

Average useful life of Everett's non-current assets in 2014 rounded to one decimal place is:

Value of non current assets 190,000

Depreciation charged for the year 47,500

Useful life of asset = 190,000/47,500 = 4.0 years

Now Average useful life of Everett's non-current assets in 2015 rounded to one decimal place is:

Value of non current assets 250,000

Depreciation charged for the year 62,500

Useful life of asset = 250,000/62,500 = 4.0 years

Increase in asset is by 60,000 from 2014 to 2015 and Increase in depreciation expense is by 15,000.

So useful life of Everett's asset is 60,000/15,000 = 4.0years

Answer is b. 4.0 years

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