Fireworks City Information for 2012 and 2011 is presented below for this company which uses the straight-line depreciation method.
$\begin{array}{l}
\begin{array}{lll}
\
\text { Property, plant and equipment }\
\text { Accumulated depreciation }\
\text {Depreciation expense }\
\text {Net sales }\
\text { Total assets }\
\end{array}
\begin{array}{lll}
\underline{ 2012 }& \underline{ 2011 } \
{ \$750,000 } & { \$ 190,000 } \
100,000 & 85,000 \
62,500 & 47,500 \
1,000,000 & 900,000 \
625,000 & 475,000
\end{array}
\end{array}$
-Refer to Fireworks City.Using the data for 2012,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 2012 and 2011 is presented below for this company which uses the straight-line depreciation method.
$\begin{array}{l}
\begin{array}{lll}
\
\text { Property, plant and equipment  }\
\text { Accumulated depreciation   }\
\text {Depreciation expense }\
\text {Net sales }\
\text { Total assets }\
\end{array}
\begin{array}{lll}
 \underline{ 2012 }&  \underline{ 2011 } \ 
 { \$750,000 } & { \$ 190,000 } \
100,000 & 85,000 \ 
62,500 & 47,500 \ 
1,000,000 & 900,000 \ 
625,000 & 475,000
\end{array}
\end{array}$ 
-Refer to Fireworks City.Using the data for 2012,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 accumulated depreciation by the depreciation expense. In this case, the accumulated depreciation is $100,000 and the depreciation expense is $62,500, so the average age is $100,000/$62,500 = 1.60 years.

Fireworks City Information for 2012 and 2011 Is Presented Below