C is corrent. The solutions approach is to determine the annual SL depreciation and divide the annual depreciation into the total amount to be depreciated. The annual depreciation is $45,000, which when divided into the total depreciation base of $720,000, indicates a composite life of 16 years. | Machine A | $500,000 depr. base/20 yrs | = | $25,000 depr. | | Machine B | 180,000 depr. base/15 yrs | = | 12,000 depr. | | Machine C | 40,000 depr. base/ 5 yrs. | = | 8,000 depr. | | | $720,000 total depr. Base | = | $45,000 total depr. | | | $720,000/$45,000 | = | 16 years |
Assets can be grouped for composite depreciation purposes. Under this method, major repair/replacement expenditures are charged to an accumulated depreciation account. Related gains (losses) on disposal of individual assets are usually not recognized. The difference between the proceeds received and the asset’s cost is debited to accumulated depreciation.A is incorrect. The solutions approach is to determine the annual SL depreciation and divide the annual depreciation into the total amount to be depreciated. The annual depreciation is $45,000, which when divided into the total depreciation base of $720,000, indicates a composite life of 16 years. | Machine A | $500,000 depr. base/20 yrs | = | $25,000 depr. | | Machine B | 180,000 depr. base/15 yrs | = | 12,000 depr. | | Machine C | 40,000 depr. base/ 5 yrs. | = | 8,000 depr. | | | $720,000 total depr. Base | = | $45,000 total depr. | | | $720,000/$45,000 | = | 16 years |
Assets can be grouped for composite depreciation purposes. Under this method, major repair/replacement expenditures are charged to an accumulated depreciation account. Related gains (losses) on disposal of individual assets are usually not recognized. The difference between the proceeds received and the asset’s cost is debited to accumulated depreciation. B is incorrect. The solutions approach is to determine the annual SL depreciation and divide the annual depreciation into the total amount to be depreciated. The annual depreciation is $45,000, which when divided into the total depreciation base of $720,000, indicates a composite life of 16 years. | Machine A | $500,000 depr. base/20 yrs | = | $25,000 depr. | | Machine B | 180,000 depr. base/15 yrs | = | 12,000 depr. | | Machine C | 40,000 depr. base/ 5 yrs. | = | 8,000 depr. | | | $720,000 total depr. Base | = | $45,000 total depr. | | | $720,000/$45,000 | = | 16 years |
Assets can be grouped for composite depreciation purposes. Under this method, major repair/replacement expenditures are charged to an accumulated depreciation account. Related gains (losses) on disposal of individual assets are usually not recognized. The difference between the proceeds received and the asset’s cost is debited to accumulated depreciation. D is incorrect. The solutions approach is to determine the annual SL depreciation and divide the annual depreciation into the total amount to be depreciated. The annual depreciation is $45,000, which when divided into the total depreciation base of $720,000, indicates a composite life of 16 years. | Machine A | $500,000 depr. base/20 yrs | = | $25,000 depr. | | Machine B | 180,000 depr. base/15 yrs | = | 12,000 depr. | | Machine C | 40,000 depr. base/ 5 yrs. | = | 8,000 depr. | | | $720,000 total depr. Base | = | $45,000 total depr. | | | $720,000/$45,000 | = | 16 years |
Assets can be grouped for composite depreciation purposes. Under this method, major repair/replacement expenditures are charged to an accumulated depreciation account. Related gains (losses) on disposal of individual assets are usually not recognized. The difference between the proceeds received and the asset’s cost is debited to accumulated depreciation. |
