Mondale Winery depreciates its equipment using the group method. The cost of equipment purchased in 2013 totaled $465,000. The estimated residual value of the equipment was $44,000 and the group depreciation rate was determined to be 12%. Solution The depreciation rate is equal to annual depreciation / initial value Cost .

1. Mondale Winery depreciates its equipment using the group method. The cost of equipment
purchased in 2013 totaled $465,000. The estimated residual value of the equipment was $44,000
and the group depreciation rate was determined to be 12%.
a. What is the annual depreciation for the group?
Solution
The depreciation rate is equal to annual depreciation / initial value Cost
Cost $465,000
Residual value $44,000
Value to depriciated $421,000
Rate 12%
Annual depriciation $55,800