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 on 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.   

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%)  

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 Land $114 $120 Buildings and building equipment 23 2,572 3,037 Machinery and equipment 11 4,611 5,089 Dies, patterns, tools, etc 1,567 1,552 All other 5 889 8 875 345 530 Construction in progress Total at cost Less accumulated depreciation 10,084 11,217 5,846 5,694 $4,238 $5,523 Total *Weighted averages 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. X 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%) X %

Answer 1

:: Solution ::

a. Calculate the estimated useful life of D's depreciable assets at year end 2015 Depreciable asset cost Buildings and building equipment Machinery and equipment Dies, patterns, tools, etc. All other Total Depreciable asset cost Depreciation Expenses Depreciable asset cost Average Useful life Depreciation Expense $10,513 $692 =15.19 2015 $3,016 $5,055 $1,567 $875 $10,513 $692 million million 15.19 years = b. Estimate the percent used up of D's depreciable assets at year end 2015 Accumulated depreciation Percent used up = Depreciable asset cost $5,846 $10,513 = 55.61% Therefore, percent used up of D's depreciable asset at year end 2015 is 55.61%