Estimating Useful Life and Percent Used
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.
|Property and Equipment ($ millions)||(Years)||2015||2014|
|Buildings and building equipment||
|Machinery and equipment||
|Dies, patterns, tools, etc||
|Construction in progress||345||530|
|Total at cost||10,528||11,217|
|Less accumulated depreciation||5,846||5,694|
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.
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%)
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
Percent used up= Accumulated depreciation/Depreciable asset cost
Percent used up=$5846 million/$10069 million= 58.06%
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