Question

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	2,794	3,037
Machinery and equipment	11	4,833	5,089
Dies, patterns, tools, etc	8	1,567	1,552
All other	5	875	889
Construction in progress		345	530
Total at cost		10,528	11,217
Less accumulated depreciation		5,846	5,694
Total		$4,682	$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%)
______%

Answer 1

1. Estimated useful life of Deere’s depreciable assets at year end 2015:

Average useful life= Total depreciable asset cost/depreciation expenses

Average useful life=( Building and building equipment+ machinery and equipment+ dies, patterns, tools etc, All other)/ $692 million

Average useful life=($2794+ 4833+ 1567+ 875)million/$692 million

Average useful life=$10069 million/$692 million= 14.55 years

1. Estimated percent used up of Deere’s depreciable assets at year end 2015:

Percent used up= Accumulated depreciation/Depreciable asset cost

Percent used up=$5846 million/$10069 million= 58.06%