At the beginning of 2015, your company buys a $28,800 piece of equipment that it

Question

At the beginning of 2015, your company buys a $28,800 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 produce a total of 200,000 units. Actual production is as follows: 48,000 units in 2015, 55,000 units in 2016, 45,000 units in 2017, and 52,000 units in 2018. Required: a. Determine the depreciable cost. Depreciable Cost b. Calculate the depreciation expense per year under the straight-line method. Depreciation Expense per year c. Use the straight-line method to prepare a depreciation schedule. Year DepreciatioAccumulateket Book Expense Depreciation Acquisition cost 2015 2016 2017 2018 d. Calculate the depreciation rate per unit under the units-of-production method. (Round your answer to 2 decimal places.) Depreciation Rate Per Unit

Explanation / Answer

a Depreciable cost = 28800-4000= 24800 b Depreciation expense per year = 24800/4= 6200 c Year Depreciation expense Accumulated depreciation Net book value Acquisition cost 28800 2015 6200 6200 22600 2016 6200 12400 16400 2017 6200 18600 10200 2018 6200 24800 4000 d Depreciation rate per unit = 24800/200000=0.12 e Year Depreciation expense Accumulated depreciation Net book value Acquisition cost 28800 2015 5952 5952 22848 2016 6820 12772 16028 2017 5580 18352 10448 2018 6448 24800 4000

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