On January 1, 2011, Morrow Inc purchased a spooler at cost of $ 40,000. The equi

Question

On January 1, 2011, Morrow Inc purchased a spooler at cost of $ 40,000. The equipment is expected to last 8 yrs and have a residual value of $4,000. During its 8 yrs life, the equipment is expected to produce 250,000 units of product. In 2011 and 2012, 42,000 and 76,000 units respectively were produced. Compute depreciation for 2011 and 2012 and the book value assuming unit of production method is used.

This is what I have so far:$40,000-4,000/250,000=.1440
2011 42,000* .1440=6,048
2012 76,000 *.1440=10,944
I am confused on how to calculate the book value for 2011 & 2012.

Explanation / Answer

depreciation=dep amt*production/estimated production so,for 2011,dep=756 2012,dep=1368 book value for 2011=40000-756=39244 2012=39244-1368=37876

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.