Problem 2

Machines are acquired by Tara Corporation on January 1, 2023 as follows:

Estimated Estimated

Machine Cost Residual Value Service Life

511 $27,000 $5,000 11 years

512 $31,000 $7,000 6 years

513 $52,000 $10,000 7 years

514 $32,000 $0 8 years

515 $23,000 $3,000 4 years

Required:

(a) Calculate the composite depreciation rate for this group.

(b) Calculate the average service life in years for this group.