Challenge Exercises E7-43 Learning Objective 2: Computing units-of-production de

Question

Challenge Exercises E7-43 Learning Objective 2: Computing units-of-production depreciation) Buff Gym purchased exercise equipment at a cost of $107,000, In addition, Buff paid $3,000 for a special platform on which to stabilize the equipment for use. Freight costs of $1,600 to ship the equipment were borne by the seller. Buff will depreciate the equipment by the units-of- production method, based on an expected useful life of 55,000 hours of exercise. The estimated residual value of the equipment is $11,000. How many hours did Buff Gym use the machine if depreciation expense is $4,320? E7-44 (Learning Objective 4: Determining the sale price of property and equipment) Wilson Corporation reported the following for property and equipment (in millions, adapted): Property and eguipmenc Accunulated depredati 20X6 $24073 $2011 During 20X7, Wilson paid $2,510 million for new property and equipment. Depreciation for the year totaled $1,546 million. During 20X7, Wilson sold property and equipment for cash of $48 million, How much was Wilson's gain or loss on the sale of property and equipment during 20XT?

Explanation / Answer

E7-43) Calculate hours did for use the machine if depreciation expenses is $4320

Cost of equipment = (107000+3000)= 110000

Salvag value = 11000

Dep rate = (110000-11000)/55000 = 1.8 per hour

IF dep exp is $4320 then production hours = 4320/1.8 = 2400 Hours

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