Question

# Estimating Useful Life and Percent Used Up The property and equipment footnote from the Deere &...

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%)
______%

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%

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