(i) For the following group of assets, compute the composite depreciation rate, the composite life and the amount of depreciation recorded for the first year of ownership of the asset group, assuming that the group of assets was purchased on January 1:
Asset Original Cost Salvage Value Estimated Life in years
A $11,000 $ 500 5
B $ 7,000 $ 200 4
C $ 12,500 $ 800 3
D $16,000 $1,000 6
(ii) If Asset B is sold for $1,000 at the end of 3 years, what journal entry should be made? I need to answerthis question.
| (n) | depr. | |||||
| orig | salvage | est. life | cost | |||
| asset | cost (oc) | value (sv) | in years | oc – sv | sv / n | |
| A | $11,000 | $500 | 5 | $10,500 | $2,100 | |
| B | $7,000 | $200 | 4 | $6,800 | $1,700 | |
| C | $12,500 | $800 | 3 | $11,700 | $3,900 | |
| D | $16,000 | $1,000 | 6 | $15,000 | $2,500 | |
| TOTAL | $46,500 | $2,500 | 4.31 | $44,000 | $10,200 |
Composite life equals the total
depreciable cost divided by the total depreciation per year.
= $44,000 / $10,200 = 4.31 years.
Composite depreciation rate equals depreciation
per year divided by total historical cost.
=$10,200 / $46,500 = 22%
Dep Recorded for Year 1 = $10,200
Item (i) hs been completed, I need help with item (ii), please. Thank you