What is the amount of units of production depreciation for an asset that cost for $250,000...

What is the amount of units of production depreciation for an asset that cost for $250,000 a salvage value of 10,000 and is estimated to produce 40,000 units and produce is 6500 units in the first year?

Expert Solution

Correct Answer:

Depreciation expense

$ 39,000

Working:

Units of Production method
A	Cost	$ 250,000
B	Residual Value	$ 10,000
C=A - B	Depreciable base	$ 240,000
D	Usage in units(in Units)	40000
E =C/D	Depreciation per unit	$ 6.0

	A	B	C = B * Depreciation per unit	D =A-C
Year	Book Value	Usage	Depreciation expense	Ending Book Value
1	$ 250,000	$ 6,500	$ 39,000	$ 211,000

End of answer.

Thanks

ekkarill92 answered 3 years ago

Units of Production Method The cost of the asset: $300,000.00 The salvage value: $10,000.00 The life...

Units of Production Method The cost of the asset: $300,000.00 The salvage value: $10,000.00 The life of the asset in production units: 11,000 units Calculate the Depreciation per Unit to the nearest dollar, then determine the Book Value at the End of 2,200 units.

DEPRECIATION Calculate the complete depreciation table for an asset with a Cost Basis of $80,000, a...

DEPRECIATION Calculate the complete depreciation table for an asset with a Cost Basis of $80,000, a Salvage Value of $20,000 and a useful life of 6 years with the Declining Balance 200% method with switchover to Straight Line Method.

what is the amount of double declining balance depreciation for year five if the cost of...

what is the amount of double declining balance depreciation for year five if the cost of an asset is $75,000 do useful life is five years in a salvage value is $4000

What is depreciation and the purpose? Does the book value of a fixed asset (cost minus...

What is depreciation and the purpose? Does the book value of a fixed asset (cost minus accumulated depreciation) communicate to a user what the asset is worth? Why or why not? Should the financial statements reflect the value of fixed assets? Why or why not?

Different depreciation methodologies: straight line depreciation, declining balance, units of production depreciation methods; should be able...

Different depreciation methodologies: straight line depreciation, declining balance, units of production depreciation methods; should be able to compute the depreciation amount and journal entries using each of those methods.

Cost Salvage Value Useful Life Units of Production MACRS Class Life Asset #1 $ 1,400,000 $ ...

Cost Salvage Value Useful Life Units of Production MACRS Class Life Asset #1 $ 1,400,000 $ 100,500 5 2016 41,000 5 * Total units of 2017 48,000 output = 2018 26,000 160,000 On january 1st 2016, the company purchased the above asset. Then, calculate the annual depreciation for 2016, 2017, and 2018 assuming they were all purchased June 1st, 2016. Show all of your work.

If a fixed asset with an original cost of 18,000 and accumulated depreciation of 2000 and...

If a fixed asset with an original cost of 18,000 and accumulated depreciation of 2000 and sold for 15,000 the company must

A variety of depreciation methods are used to allocate the cost of an asset to all...

A variety of depreciation methods are used to allocate the cost of an asset to all of the accounting periods benefited by the use of the asset. Your client has just purchased a piece of equipment for $100,000. Explain the concept of depreciation. Which of the following depreciation methods would you recommend: straight-line depreciation, double declining balance method, or an alternative method. Share with us if a company would use an accelerated depreciation method for their financial statements or their...

Inventories $150,000 Cost of Goods Sold $250,000 Administrative Expenses $50,000 Accumulated Depreciation $150,000 Sales $700,000 Depreciation...

Inventories $150,000 Cost of Goods Sold $250,000 Administrative Expenses $50,000 Accumulated Depreciation $150,000 Sales $700,000 Depreciation Expense $25,000 Selling Expenses $150,000 Common Stock Dividends $18,000 Interest Expense $18,000 Corporate Tax Rate 30% Prepare an income statement using the information given below. Make sure to identify gross profit, operating income, and net income. Please define what each number represents and why it is important to a business.

How do I compute the units of production method of depreciation? Example?

Question