Highsmith Rental Company purchased an apartment building early in 2013. There ar
ID: 2480357 • Letter: H
Question
Highsmith Rental Company purchased an apartment building early in 2013. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The following data are available: Appliance Cost Residual Value Service Life (in Years) Stoves $ 37,000 $ 4,000 6 Refrigerators 32,000 3,000 5 Dishwashers 30,000 2,000 4 In 2016, three new refrigerators costing $3,800 were purchased for cash. The old refrigerators, which originally cost $3,700, were sold for $1,300.
Calculate the group depreciation rate, group life, and depreciation for 2013. (Round the Group depreciation rate to 1 decimal place and Group life to 2 decimal places.)
Group depreciation rate
group life
depreciation for 2014 -straight line
Required:Explanation / Answer
residual
value
depreciable value
of asset
estimated
life
(in years)
depreciation
per annum
group depreciation rate = depreciation per annum / cost
= 18,300 / 99,000
= 18.48 %
group life = depreciable value of asset / depreciation per annum
= 90,000 / 18,300
= 4.92 years
new refregirators purchased in 2016 is not relavent for the given question.
asset costresidual
value
depreciable value
of asset
estimated
life
(in years)
depreciation
per annum
stoves 37,000 4,000 33,000 6 5,500 refrigerators 32,000 3,000 29,000 5 5,800 dishwishers 30,000 2,000 28,000 4 7,000 total 99,000 9,000 90,000 18,300Related Questions
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