Question 3

Novak Inc. owns the following assets.

Asset		Cost		Salvage		Estimated Useful Life
A		$72,500		$7,250			10 years
B		53,800		5,380			5 years
C		102,500		5,000			12 years

Compute the composite depreciation rate and the composite life of Novak's assets. (Round answers to 1 decimal place, e.g. 4.8% or 4.8 years.)

Composite depreciation rate		enter percentages rounded to 1 decimal place	%
Composite life		enter a number of years rounded to 1 decimal place

Vaughn Corporation acquires a coal mine at a cost of $450,800. Intangible development costs total $115,000. After extraction has occurred, Vaughn must restore the property (estimated fair value of the obligation is $92,000), after which it can be sold for $184,000. Vaughn estimates that 4,600 tons of coal can be extracted. If 805 tons are extracted the first year, prepare the journal entry to record depletion. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount