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 2 years ago

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