Composite account depreciation

Composite account depreciation, 290 Compound interest, definition of 217-218 (See also specific designation)... 

To simplify the accounting procedures, many concerns combine then-various assets into groups for depreciation purposes. There are several types of group accounts employed, and the most common among these are composite accounts, classified accounts, and vintage-group accounts. 

A composite account includes all depreciable assets in one single group, and an overall depreciation rate is applied to the entire account. With this method, the composite depreciation rate must be redetermined when important changes occur in the relative distribution of the service lives of the individual assets. 

Instead of including all assets in a single depreciation account, it is possible to classify properties into general types, such as machinery and equipment, office furniture and fixtures, buildings, and transportation equipment. The records for these groups are known as classified accounts. A classified account is similar to a composite account because many items are included in the same group, regardless of life characteristics. 

A concern has a total income of 1 million/year, and all expenses except depreciation amount to 600,000/year. At the start jjf the first year of the concern s operation, a composite account of all depreciable items shows a value of 850,000, and Ihe overall service life is estimated to be 20 years. The total salvage value at the end of the service life is estimated to be 50,000. Thirty percent of all profits before taxes must be paid out as income taxes. What would be the reduction in income-tax charges for the first year of operation if the sum-of-the-years-digits method were used for depreciation accounting instead of the straight-line method ... 

All rocket motor costs per unit, and therefore rocket proplnt costs, are most sensitive to the number of units being produced and to the number of different formulations mixed in a given time interval, by the same equipment, so that a direct comparson based only on processes or proplnt types are meaningless. There are also inherent difficulties in comparing NC base proplnts with composite propints. The former are made in government plants (some of which are operated by private industry) for the most part and so accounting for indirect costs (taxes, depreciation, insurance, and return on investment) cannot be compared to the situation... 

In Other Value Added (Table 4.4b) is property-type income, which is a composite of several factors, including proprietor s income, rental income of persons, corporate profits, inventory valuation adjustment, net interest, business transfer payments, surplus of government enterprises less subsidies, and capital consumption allowances (depreciation, depletion, and amortization). As expected, property-type income is highest for sector 7 IB, real estate. The depreciation part of property-type income accounts for the high values of some of the CPI sectors (e.g., 27 and 29). The depletion part of property-type income accounts for the moderately high values of sector 8, crude petroleum and natural gas. 

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