Question

Waterway Inc. owns the following assets. Estimated Useful Salvage Asset Cost Life $72,100 $7,210 10 years 5 years 53,200 5,320 4,840 12 years C 99,220 Compute the composite depreciation rate and the composite life of Waterway's assets. (Ro place, e.g. 4.8% or 4.8 years.) Composite depreciation rate years Composite life

Answer 1

Answer-1
Asset	Cost	Salvage Value	Depreciable cost	Estimated Useful life	SL Depreciation per year
A	$                 72,100	$         7,210	$      64,890	10	$          6,489
B	$                 53,200	$         5,320	$      47,880	5	$          9,576
C	$                 99,220	$         4,840	$      94,380	12	$          7,865
Total	$              2,24,520		$   2,07,150		$        23,930
Composite rate of depreciation = Total Depreciation per year/Total original Cost
			= 23930/224520
			10.7%
Composite life =Total Depreciable Cost/Total Depreciation
	=207150/23930
	=8.7 yrs
Answer-2
Cost of the coal mine = $4,28,000+ $ 1,07,000+ $ 85,600-$ 1,71,200
		=$4,49,400
Total Tone to be extracted = 4280 Tons
Cost per ton = 449400/4280
	=$105 per ton
Depreciation = 105*749
	=$78,645
Date	Account title	Debit	Credit
	Depletion Expense	$      78,645
	Coal Mine Asset		$      78,645
	(being depletion expense recorded)