d Depreciation A summary of property and equipment at October 31 follows. Useful Lives* Property and Equipment ($ millions) (Years) 2015 2014 Land $114 $120 Buildings and building equipment 23 2,572 3,037 Machinery and equipment 11 4,611 5,089 Dies, patterns, tools, etc 8 1,567 1,552 All other 5 875 889 Construction in progress 345 530 Total at cost 10,084 11,217 Less accumulated depreciation 5,846 5,694 Total
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Estimating Useful Life and Percent Used Up
The property and equipment footnote from the Deere & Company Equipment and Operations segment follows.
Property and Depreciation A summary of property and equipment at October 31 follows.
Useful Lives* | |||
---|---|---|---|
Property and Equipment ($ 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 | 8 | 1,567 | 1,552 |
All other | 5 | 875 | 889 |
Construction in progress | 345 | 530 | |
Total at cost | 10,084 | 11,217 | |
Less |
5,846 | 5,694 | |
Total | $4,238 | $5,523 | |
*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
Round answer to one decimal place.
Answer 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%)
Answer%
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