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Estimating Useful Life and Percent Used Up
The property and equipment footnote from Tesla follows. Assume that 25% of the amount classified as "Land and buildings" pertains to the cost of the Land.

Property and Depreciation Our property, plant and equipment, net, consists of the following (in thousands):

December 31	2018	2017
*Weighted averages
Machinery, equipment, vehicles and office furniture	$6,328,966	$4,251,711
Tooling	1,397,514	1,255,952
Leaseholder improvements	960,971	789,751
Land and buildings	4,047,006	2,517,247
Computer equipment, hardware and software	487,421	395,067
Construction in progress	807,297	2,541,588
	14,029,175	11,751,316
Less accumulated depreciation	(2,699,098)	(1,723,794)
Total	$11,330,077	$10,027,522

Depreciation expense during the years ended December 31, 2018, 2017, and 2016 was $1.11 billion, $769.3 million, and $477.3 million, respectively.

a. Compute the average useful life of Tesla’s depreciable assets at year-end 2018. Round answer to one decimal place.
Answer

years

b. Estimate the percent used up of Tesla’s depreciable assets at year-end 2018. Round answer to one decimal place (ex: 0.2345 = 23.5%)
Answer

Answer to Question A) = 9.3 years

Answer to Question B) = 26%

	2018	2017
	Machinery, equipment, vehicles and office furniture	6,328,996	4,251,711
	Tooling	1,397,514	1,255,952
	Leaseholder improvements	960,971	789,751
	buildings	3,035,254.50	1,887,935.25
Computer equipment, hardware and software	487,421	395,067
Total	12,210,156.50	8,580,416.25
Accumulated Depreciation for 2018	2,699,098.00
Depreciation Expense for 2018	1,110,000.00
Question a)	[(12210156.5+8580416.25)/2] = 10,395286.38
	(10,395,286.38/1,110,000) = 9.3 years
Question b)	[(12210156.5+8580416.25)/2] = 10,395286.38
	(2,699,098/10,395,286.38) = .25963 = 26%

Answer 1

(a) The average useful life of Tesla’s depreciable assets at year-end 2018 = 9.3 years

Working :

Average useful Life = Average cost of depreciable asset / Depreciation

Calculation of Total depreciable assets

Particular	2018 ($)	2017 ($)
Machinery, equipment, vehicles and office furniture	6328966	4251711
Tooling	1397514	1255952
Leaseholder improvements	960971	789751
Land and buildings (75% )	3035254.5	1887935.25
Computer equipment, hardware and software	487421	395067
Total Depreciable assets	12210126.5	8580416.25

Average cost of asset =( 12210126.5 + 8580416.25 ) / 2

Average cost of asset = 10395271.37

Depreciation expense for 2018 ( given ) = 1110000

Average useful Life = 10395271.37 / 1110000

Average useful life = 9.3 years

(b)  The percent used up of Tesla’s depreciable assets at year-end 2018 = 26%

Working :

Percent used up = Accumulated depreciation in 2018 / Average Total depreciable assets

Percent used up = 2699098 / 10395271.37

Percent used up = 0.2596 or 26 %