Question

21. The 2016 financial statements of Willamette Valley Vineyards, Inc. include the following footnote: Note 4. Property and Equipment December 31, 2016 December 31, 2015 Construction in progress $ 449,409 $ 482,284 Land 8,063,716 5,089,472 Winery buildings and hospitality center 14,458,309 13,756,320 Equipment 10,122,593 9,055,987 33,094,027 28,384,063 Less accumulated depreciation (12,897,082) (11,654,901) $20,196,945 16,729,162 Depreciation expense $ 1,254,455 $ 1,194,191 The average useful life of Willamette’s depreciable assets at the end of fiscal 2016 is:

Answer 1

To find the average useful life of Willamette's depreciable assets for 2016, the total depreciable base (excluding land) is divided by the annual depreciation expense, which gives an average useful life of approximately 19.6 years.

Step-by-step explanation:

To calculate the average useful life of Willamette's depreciable assets, you would divide the total depreciable base of the assets (original cost) by the annual depreciation expense. The original cost of the assets is the sum of the value of construction in progress, land, winery buildings and hospitality center, and equipment. However, since land is not a depreciable asset, you would exclude it from the calculation.

The total depreciable base as of December 31, 2016, is the sum of the winery buildings and hospitality center ($14,458,309) and equipment ($10,122,593), which equals $24,580,902. The annual depreciation expense for fiscal 2016 is $1,254,455. Therefore, the average useful life is calculated as $24,580,902 / $1,254,455, which equals approximately 19.6 years.

Answer 2

The average useful life of the assets is 19.59 years

Step-by-step explanation: 2016 2015

Winery buildings and hospitality center 14,458,309 13,756,320

Equipment 10,122,593 9,055,987

Totals 24,580,902 22,812,307

Less accumulated depreciation (12,897,082) (11,654,901)

Net Equipment 20,196,945 16,729,162

Depreciation expense 1,254,455 1,194,191

average useful life:

24,580,902 / 1,254,455 = 19.59 years