Question

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	2,572	3,037
Machinery and equipment	11	4,611	5,089
Dies, patterns, tools, etc	8	1,567	1,552
All other	5	875	889
Construction in progress		345	530
Total at cost		10,084	11,217
Less accumulated depreciation		5,846	5,694
Total		$4,238	$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 average useful life of Deere’s depreciable assets at year-end 2015.

Round answer to one decimal place.
Answer

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%)
Answer

%

Answer 1

a) Depreciable asset cost at yea-end 2015 = Total cost - Land - Construction in progress = 10,084 - 114 - 345 = $9,625 million Land and Construction in progress are not considered while calculating Depreciable asset cost because these assets are not depreciated. Depreciation expense for year 2015 = $692 million Average useful life at year-end 2015 - Depreciable asset cost / Depreciation expense = 9,625 / 692 = 13.9 years b) Accumulated depreciation at year-end 2015 = $5,846 million Percent used up at year end 2015 = Accumulated depreciation / Depreciable asset cost = 5,846 / 9,625 = 60.7%