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The Composite Life of the Assets

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A schedule of machinery owned by Red Bird Manufacturing Company is as follows:

Total Estimated Cost: Machine A: $450,000, Machine B, $170,000, Mach C $40,000

Estimated Salvage Value: Mach A: $30,000, Mach B: $10,000, Mach C: $0

Life in Years: Mach A: 6, Mach B: 8, Mach C: 4

Red Bird computes composite depreciation on the straight-line method. What is the "composite life" of these assets?

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Solution Summary

This solution provides a step-by-step tutorial explaining how to use the strait-line method to calculate the composite life of an organization's assets.

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Composite life = Total depreciable cost / Total depreciation per year

Depreciable cost of machine A = 450,000-30,000=420,000 (cost - ...

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