Bybee Corporation acquired real estate that contained land, building and equipme

Question

Bybee Corporation acquired real estate that contained land, building and equipment. The property cost Bybee $1,710,000. Bybee paid $455,000 in cash and issued a Note Payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $481,000; Building, $1,430,000 and Equipment, $949,000. Assume that Bybee uses the units-of-production method when depreciating its equipment. Bybee estimates that the purchased equipment will produce 1,080,000 units over its 5 years useful life and has salvage value of $18,000. Bybee produced 273,000 units with the equipment by the end of the first year of purchase. The equipment costs 567,409.09. What amount will Bybee record for depreciation expense on the equipment in the first year?

a- $235,336

b- $124,872

c-$239,886

d-$138,878

Explanation / Answer

Calculate depreciation expense of first year :

Depreciation expense = (567409.09-18000)/1080000*273000 = 138878

So answer is d) $138878

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

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