Fireworks City
Information for 2020 and 2019 is presented below for this company which uses the straight-line depreciation method.
-Refer to Fireworks City. Using the data for 2020, determine the average age of the company's property, plant, and equipment.
A)1.60 years
B)2.50 years
C)4.00 years
D)10.00 years

Question

Fireworks City
Information for 2020 and 2019 is presented below for this company which uses the straight-line depreciation method. 
-Refer to Fireworks City. Using the data for 2020, determine the average age of the company's property, plant, and equipment.
A)1.60 years 
B)2.50 years 
C)4.00 years 
D)10.00 years

Quizplus · Accepted Answer

The average age of the company's property, plant, and equipment is calculated by dividing the net property, plant, and equipment by the depreciation and amortization expense. For 2020, the net property, plant, and equipment is $10,000,000 and the depreciation and amortization expense is $2,500,000. Therefore, the average age of the company's property, plant, and equipment is $10,000,000 / $2,500,000 = 4.00 years.

Fireworks City Information for 2020 and 2019 Is Presented Below for This