Question

The company decided to depreciate equipment using units of production, The table below contains details of production for the following years and some additional information


Period Units produced
2018 12000
2019 22000
2020 28000
2021 30000
2022 18000
The equipment is estimated to have the capacity to produce 90,000 units. The salvage value of the equipment is $ 30,000

REQUIRED

1. Make a depreciation schedule for the equipment purchased.
2. Journalize the deprecation expense for 2019.
3. Give a balance sheet extract for 2021

equipment= 160,000

Answer 1

Depreciable Base = Asset Cost - Salvage Value

Depreciation per Unit = Depreciable Base / Total Units

Depreciation for Period = Depreciation per Unit x Number of Units Produced in a Period

Period Units produced
2018 12000
2019 22000
2020 28000
2021 30000
2022 18000
total units produced is 110000

equipment cost = $ 160000

The salvage value of the equipment = $ 30000

The equipment is estimated to have the capacity to produce = 90000 units

Depreciable Base = $ 160000 - $ 30000 = $ 130000

Depreciation per Unit = $ 130000 / 90000 = $ 1.4444

Depreciation for Period = $ 1.4444 x 110000 = $158884

1) statement of  depreciation schedule for the equipment purchased

years	units produced	depreciation per unit	depreciation expense	accumulated depreciation
2018	12000	$ 1.4444	$ 17332.8	$ 17332.8
2019	22000	$ 1.4444	$ 31776.8	$ 49109.6
2020	28000	$ 1.4444	$ 40443.2	$ 89552.8
2021	30000	$ 1.4444	$ 43332	$ 132884.8
2022	18000	$ 1.4444	$ 25999.2	$ 158884
total	110000		$ 158884

2) Journalize the deprecation expense for 2019

date	particular	debit	credit
2019	depreciation expenses	$ 31776.8
	accumulatrd depreciation		$ 31776.8

3) balance sheet extracted for 2021

particular	amounts
assets :
equipment	$ 160000
less : accumulated depreciation	($ 132884.8)
total assets	$ 27115.2

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