Question

A schedule of machinery owned by Concord Corporation is presented below: Estimated Estimated Total Cost Salvage...

A schedule of machinery owned by Concord Corporation is presented below:

Estimated

Estimated

Total Cost

Salvage Value

Life in Years
Machine X

$591000

$38000

14
Machine Y

  805000

  82000

10
Machine Z

  292000

  58000

  6


Concord computes depreciation by the composite method.

The composite rate of depreciation (in percent) for these assets is

10.36.

13.79.

8.93.

8.36.

Business   Accounting   
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Answer #1

Solution - "Option -C"

Assets Category - Machine Original Cost Salvage Value Depreciable Cost Depreciable Life SL Depreciation Per Year
X 591000 38000 553000 14 39500
Y 805000 82000 723000 10 72300
Z 292000 58000 234000 6 39000
Total 1688000 150800

Composite rate of depreciation = Total Depreciation per year / Total Original cost

= 150800/1688000*100 = 8.93%

Note: About composite depreciation method also called group depreciation

The Composite method depreciates an entire group of related assets as a single entity rather than individually on the straight-line (SL) method.

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