Question

Any help wouldnbe aopreciated

Sabel Co. purchased assembly equipment for $464,000 on January 1, 2018. Sabel's financial condition immediately prior to the purchase is shown in Required B. The equipment is expected to have a useful life of 290,000 machine hours and a salvage value of $29,000. Actual machine-hour use was as follows: 2018 2019 2020 2021 2022 75,000 73,000 71,000 55,000 19,000 Required a. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation. b. Assume that Sabel earns $239,000 of cash revenue during 2018. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in a horizontal statements model. The first event is recorded as an example, c. Assume that Sabel sold the equipment at the end of the fifth year for $30,500. Calculate the amount of gain or loss on the sale Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the depreciation for each of the five years, assuming the use of units of production depreciation. (Do not round Intermediate calculations.) Depreciation Years 2018 2019 2020

Answer 1

a.
Depreciation = (Original Value - Salvage Value) / Total Machine hours
= ($464000 - 29000) / 290000 = $1.50 per hour

Year	Hours	Depreciation Expense	Accumulated Depreciation	Book Value
1	75000	$       1,12,500	$          1,12,500	$          3,51,500
2	73000	$       1,09,500	$          2,22,000	$          2,42,000
3	71000	$       1,06,500	$          3,28,500	$          1,35,500
4	55000	$          82,500	$          4,11,000	$             53,000
5	19000	$          24,000	$          4,35,000	$             29,000

Depreciation cannot exceed such that book value goes beyond salvage value

c. Book value at end of 5th year = $29000
Sales proceeds = $30500
Gain on sale = $30500-29000 = $1500

For part b, horizontal statement not given