Question

On January 1, 2022, Happy Company purchased equipment for $65,000. The
equipment had an estimated life of 10 years, an estimated residual value
of $5,000, and was expected to be used to produce 150,000 units over its
life. During 2022, the equipment was used to produce 9,000 units and
during 2023 it was used to produce 17,000 units. Assume the company uses
the units of production depreciation method to depreciate its equipment.

Calculate the book value of the equipment at December 31, 2023.

Answer 1

Answer

• Working

A	Cost	$            65,000.00
B	Residual Value	$              5,000.00
C=A - B	Depreciable base	$            60,000.00
D	Usage	150,000
E = C/D	Depreciation per unit…..	$                    0.400

Year	Book Value	Usage	Depreciation expense	Ending Book Value	Accumulated Depreciation
2022	$              65,000.00	9,000	$            3,600.00	$             61,400.00	$           3,600.00
2023	$              61,400.00	17,000	$            6,800.00	$             54,600.00 Answer	$        10,400.00

• Book Value at Dec 31, 2023 = $ 54,600 Answer