Question

At the beginning of 2017, your company buys a $34,400 plece of equipment that it expects to use for 4 years. The equlpment has an estimated residual value of 4,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 45,000 units in 2017, 52,000 units in 2018, 45,000 units in 2019, and 58,000 units in 2020. Required: a. Determine the depreciable cost b. Calculate the depreciation expense per year under the straight-line method. c. Use the stralght-line method to prepare a depreciation schedule. d. Calculate the depreciation rate per unit under the units-of-production method. e. Use the units-of-production method to prepare a depreclation schedule Complete this question by entering your answers in the tabs below. Requirel A Required B Required C Required D Required E Determine the depreciable cost. Depreciable Cost Required A Required B

Answer 1

a)

Depreciable cost

$30,400

Explanation:-

Cost of Equipment	$34,400
Less: salvage value	$4,000
Depreciable cost	$30,400

b)

Depreciation expense per year

$7,600

Explanation:-

Depreciable cost	$30,400
Divide: life of Equipment	4 years
Depreciation expense per year	$7,600

c)

Year	Depreciation expense	Accumulated depreciation	Net book value
Acquisition cost			$34,400
2017	$7,600	$7,600	$26,800 ($34,400 -$7,600)
2018	$7,600	$15,200	$19,200 ($26,800- $7,600)
2019	$7,600	$22,800	$11,600 ($19,200 -$7,600)
2020	$7,600	$30,400	$4,000 ($11,600 -$7,600)

d)

Depreciation rate per unit

0.152

Explanation:-

Depreciable cost	$30,400
Divide: Total production units	2,00,000
Depreciation rate per unit	0.152

e)

Year	Depreciation expense	Accumulated depreciation	Net book value
Acquisition cost			$34,400
2017	45,000 × 0.152 = $6,840	$6,840	$27,560 ($34,400 -$6,840)
2018	52,000 × 0.152 =$7,904	$14,744	$19,656 ($27,560- $7,904)
2019	45,000 × 0.152 = $6,840	$21,584	$12,816 ($19,656 - $6,840)
2020	58,000 × 0.152 = $8,816	$30,400	$4,000 ($12,816 -$8,816)