Presented below is information related to Crane Manufacturing Corporation. Asset A B C D E (a) Cost $40,000 32,000 35,000 18,000 23,000 Estimated Salvage Composite rate $5,000 4,100 3,500 1,200 2,600 Estimated Life (in years) 10 % 9 9 7 Compute the rate of depreciation per year to be applied to the plant assets under the composite method. (Round answer to 2 decimal place, e.g. 4.83%.) 6
Presented below is information related to Crane Manufacturing Corporation. Asset A B C D E (a) Cost $40,000 32,000 35,000 18,000 23,000 Estimated Salvage Composite rate $5,000 4,100 3,500 1,200 2,600 Estimated Life (in years) 10 % 9 9 7 Compute the rate of depreciation per year to be applied to the plant assets under the composite method. (Round answer to 2 decimal place, e.g. 4.83%.) 6
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:### Crane Manufacturing Corporation Asset Information
The following table provides details related to assets owned by Crane Manufacturing Corporation:
| Asset | Cost | Estimated Salvage | Estimated Life (in years) |
|-------|--------|-------------------|---------------------------|
| A | $40,000| $5,000 | 10 |
| B | $32,000| $4,100 | 9 |
| C | $35,000| $3,500 | 9 |
| D | $18,000| $1,200 | 7 |
| E | $23,000| $2,600 | 6 |
#### Task (a)
**Objective**: Compute the rate of depreciation per year to be applied to the plant assets under the composite method.
*Note*: Round your answer to 2 decimal places, e.g., 4.83%.
**Composite rate**: ________ %
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