In: Accounting
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.
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 |
For any clarification, please comment. Kindly Up Vote!