Question

Bramble Inc. owns the following assets.

Asset		Cost		Salvage		Estimated Useful Life
A		$71,400		$7,140			10 years
B		52,100		5,210			5 years
C		93,480		4,560			12 years

Compute the composite depreciation rate and the composite life of Bramble’s assets. (Round answers to 1 decimal place, e.g. 4.8% or 4.8 years.)

Composite depreciation rate			%
Composite life			years

Answer 1

Answer:
Annual Depreciation - Asset A             = (Cost (-) Salvage Value ) / Useful Life             =   ( $ 71,400 (-) $ 7,140 ) / 10 Years             =    $ 64,260 / 10 Years	$ 6,426
Annual Depreciation - Asset B             = (Cost (-) Salvage Value ) / Useful Life             =   ( $ 52,100 (-) $ 5,210 ) / 5 Years             =    $ 46,890 / 5 Years	$ 9,378
Annual Depreciation - Asset B             = (Cost (-) Salvage Value ) / Useful Life             =   ( $ 93,480 (-) $ 4,560 ) / 12 Years             =    $ 88,920 / 12 Years	$ 7,410
Total Annual Depreciation	$ 23,214
Composite depreciation rate                     = Total Annual Depreciation / Total Cost of Assets                     = $ 23,214 / ( $ 71,400 + $ 52,100 + $ 93,480)                     =   $ 23,214 / $ 216,980	10.7%
Composite life              = Total depreciable Amount / Total Annual Depreciation              = ($ 64,260 + $ 46,890 + $ 88,920 )/ $ 23,214              =   ($ 200,070 / $ 23,214 )	8.6 Years