For Each of the Independent Situations Below,determine the Age of the Asset

question 80

Essay

For each of the independent situations below,determine the age of the asset in question.All assets were acquired at the beginning of the year.
a.The balance in the Buildings account is $400,000 while the balance sheet shows the book value of the buildings at $217,600.The notes to the financial statements indicate that straight-line depreciation is used for all property,plant,and equipment and that residual values are estimated at 5% of cost.The estimated life of the buildings is 25 years.
b.The book value of the delivery equipment is $51,520.The cost of the delivery equipment was $80,500.The company uses the straight-line method of depreciation for delivery equipment and estimates life at 5 years or 50,000 units.So far,27,000 units have been produced.Residual value is 10% of cost.
c.The balance in the Accumulated Depreciation account for furniture is $21,875.The furniture has been amortized a total of 43.75% of its original cost.The company's notes to the financial statements indicate that double-declining-balance depreciation is used for all furniture.The company estimates useful life at 8 years and residual value at 20% of cost.

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Definitions:

Production Blocking

A phenomenon in group brainstorming sessions where the flow of ideas is inhibited because only one person can speak at a time.

Satisfice

A decision-making strategy that aims for a satisfactory or adequate outcome, rather than the optimal solution, due to the limitations of the decision-making process.

Creative Practice

Involves engaging in activities or processes that aim to produce original and innovative ideas, solutions, or works.

Commercial Usefulness

The extent to which a product or service can be sold or used in a commercial context to satisfy a need or want.