Fleet Sports purchased manufacturing equipment with a cost of $200,000 at the beginning of 2016. The...

Fleet Sports purchased manufacturing equipment with a cost of $200,000 at the beginning of 2016. The equipment has an estimated life of 4 years or 100,000 shoes (units of product). The estimated residual value is $20,000. During 2016, 36,000 shoes (units of product) were produced with this machinery. Determine the following:

What is the depreciation expense per unit of production using the units-of-production depreciation?

What is the total depreciation expense at December 31, 2016, using units-of-production depreciation?

What is depreciation expense for the equipment at the end of 2016 using double-declining balance depreciation?

What is depreciation expense for the equipment at the end of 2018 using double-declining balance depreciation?

Assume Fleet Sports depreciated the manufacturing equipment using the straight-line method. Prepare a depreciation table as discussed in course lecture, with column headings of Year, Depreciation Expense, Accumulated Depreciation, and Book Value.

Solutions

Expert Solution

UOP method
Cost	$ 200,000
Less estimated residual value	$ (20,000)
Base for UOP method	$ 180,000
Total estimated shoes	100,000
Depreciation expense per unit of production	$ 1.80
Shoes produced in 2016	36,000
Total depreciation expense for 2016 as per UOP	$ 64,800

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ekkarill92 answered 1 year ago

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