Question

In: Accounting

On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $39,300. The drill press is expected to last 10 years and has a residual value of $6,300.

On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $39,300. The drill press is expected to last 10 years and has a residual value of $6,300. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 26,500 and 87,000 units, respectively, were produced. Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the units-of-production method is used. (Round depreciation per unit to 2 decimal places.)

Solutions

Expert Solution

Answer:-Units of production method:-

Annual depreciation expense per unit produced=Cost – salvage /Total units produced

                =($39300-$6300)/500000 units =$.07 per unit

Depreciation expense in 2018= Depreciation expense per unit* Units produced in year 2018

                                                =$.07 per unit *26500 units

                                                 =$1855

Book value at end of 2018 = $39300 – $1855 = $37445

Depreciation expense in 2019= Depreciation expense per unit* Units produced in year 2019

                                                =$.07 per unit *87000 units

                                                 =$6090

Book value at end of 2019 = $37445 – $6090 = $31355

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Principles of Financial Accounting On January 1, 2018, Hobart Mfg. Co. purchased a drill press at...
Principles of Financial Accounting On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $36,000. The drill press is expected to last 10 years and has a residual value of $6,000. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 25,000 and 84,000 units, respectively, were produced. 1. Compute depreciation expense, accumulated depreciation and the book value of the drill press at December 31, 2018 and...
On May 1, 2017, Hobart Mfg. Co. purchased a drill press at a cost of $36,000....
On May 1, 2017, Hobart Mfg. Co. purchased a drill press at a cost of $36,000. The drill press is expected to last 10 years and have a residual value of $6,000. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2017, 2018 and 2019, 25,000 75,000 and 84,000 units, respectively, were produced. REQUIRED: (Show Your Work) (a) Compute depreciation for 2017 and 2018, assuming the straight-line method is used. (b) Compute depreciation for...
On January 1, 2018, Canseco Plumbing Fixtures purchased equipment for $58,000. Residual value at the end...
On January 1, 2018, Canseco Plumbing Fixtures purchased equipment for $58,000. Residual value at the end of an estimated four-year service life is expected to be $10,000. The company expects the machine to operate for 15,000 hours. The machine operated for 3,600 and 4,400 hours in 2018 and 2019, respectively. a. Calculate depreciation expense for 2018 and 2019 using straight line method. (don't need) b. Calculate depreciation expense for 2018 and 2019 using sum-of-the-years'-digits method. Sum-of-the-years' digits depreciation Depreciable Base...
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine...
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine is expected to last 5 years and has a residual value of $14,000. Required: 1. Compute depreciation for the five year periods ending December 31 using the straight-line, sum-of-the-years digits and DDB method. 2. The machine is sold on January 1,2020 for $40,000. Compute the gain or loss for each method.
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine...
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine is expected to last 5 years and has a residual value of $14,000. Required: 1. Compute depreciation for the five year periods ending December 31 using the straight-line, sum-of-the-years digits and DDB method. straight-line: sum-of-the-years digits: DDB method: 2. The machine is sold on January 1,2020 for $40,000. Compute the gain or loss for each method.
1) ABC Co. purchased machinery that cost $200,000 on January 1, 2018. The entire cost was...
1) ABC Co. purchased machinery that cost $200,000 on January 1, 2018. The entire cost was recorded as an expense. The machinery has a nine-year life and a $10,000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations. ABC’s income statement for the year ended December 31, 2021, should show depreciation expense of          _______ 3) Equipment was purchased at the beginning of 2018 for $900,000. At the time of its purchase, the equipment was estimated...
on 1 January co purchase a machine with cost of 150000 expected life of 5 years...
on 1 January co purchase a machine with cost of 150000 expected life of 5 years and residual value of 5000 use double declinifn compute annual deprecition accumulated dep and ending book of first 2 yeara
Home Builders Inc. purchased a truck for $60,000 on January 1, 2018. It has an expected...
Home Builders Inc. purchased a truck for $60,000 on January 1, 2018. It has an expected salvage value of $11,000 at the end of its seven-year useful life. How much is combined depreciation expense in 2018 and 2019 using straight-line depreciation? How much is depreciation expense in 2018 using double-declining balance depreciation? How much is depreciation expense in 2019 using double-declining balance depreciation? How much is depreciation expense in 2018 using sum-of-years digits depreciation? How much is depreciation expense in...
KOL Limited purchased a machine on 1 January 2018 at $500,000. It has an expected useful...
KOL Limited purchased a machine on 1 January 2018 at $500,000. It has an expected useful life of 5 years and an estimated salvage value of $50,000. It is also expected that the machine can run for 30,000 hours. For the year ended 31 December 2018, KOL has used the machine for 4,000 hours. KOL has another equipment with the following data on 31 December 2018. Cost $260,000 Carrying amount $200,000 Fair value less costs to sell $180,000 Value-in-use $175,000...
On January 1, 2018, King Co. issued 10% bonds dated January 1, 2018, with a face...
On January 1, 2018, King Co. issued 10% bonds dated January 1, 2018, with a face amount of $19.2 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT