At the beginning of 2015, your company buys a $31,600 piece of equipment that it

Question

At the beginning of 2015, your company buys a $31,600 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 4,000. The company expects to produoe a total of 200,000 units. Actual production is as follows: 43,000 units in 2015, 46,000 units in 2016, 40,000 units in 2017, and 65,000 units in 2018. Required: a. Determine the depreciable cost b. Caloulate the depreciation expense per year under the straight-line method. c. Use the straight-line method to prepare a depreciation schedule. Year Value Aoquisition cost 2015 2016 2018 d. Ca suiaze the depreciasion rate cer unt under the un ta-o- decisal placesj method (Round your answer to 2 Type here to search

Explanation / Answer

a.

Depreciable cost = Cost - Residual value

= 31,600 - 4,000

= 27,600

b.

Depreciation expense per year = Depreciable cost / Useful life

= 27,600 / 4

= 6,900

c.

d.

Depreciation rate per unit = (cost - salvage value) / total estimated units

= (31,600 - 4,000) / 200,000

= 0.138 per unit

e.

Year Depreciation Expense Accumulated Depreciation Net Book Value Acquision cost 31,600 2015 6,900 6,900 24,700 2016 6,900 13,800 17,800 2017 6,900 20,700 10,900 2018 6,900 34,500 4,000

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