Inferring Useful Lives
The information that follows is from the balance sheet of Hampton Company for December 31, 2008, and December 31, 2007.
|
|
Dec 31, 2008 |
Dec 31, 2007 |
|
Equipment—cost |
$ 680,000 |
$ 680,000 |
|
Accumulated depreciation—equipment |
(250,000) |
(160,000) |
|
Buildings—cost |
2,450,000 |
2,450,000 |
|
Accumulated depreciation—buildings |
(340,000) |
(230,000) |
Hampton did not acquire or dispose of any buildings or equipment during 2008.Hampton uses the straight line method of depreciation. If residual values are assumed to be 10% of asset cost, what is the average useful life of Hampton’s (1) equipment and (2) buildings?