In: Accounting
On January 5, 2018 Calvin's Cropcrushers, Inc. purchased crop | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
crushing equipment for which the following information is available: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original cost.................. | $3,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated residual value....... | $200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Useful life in years........... | 10 | years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Useful life expressed in operating hours | 20,000 | hours | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Answer:
Units of Output method
Depreciation under Units of Output method
= [(Cost of the asset - Salvage Value) / Total hours can be used] * Actual hours used during the year
17. Accumulated Depreciation at December 31,2019
Accumulated Depreciation at December 31,2019
= Depreciation for 2018 + Depreciation for 2019
Depreciation for 2018 = [($3,800,000 - $200,000) / 20,000] * 2,900 = ($3,600,000 / 20,000) * 2,900 = $522,000
Depreciation for 2019 = [($3,800,000 - $200,000) / 20,000] * 2,700 = ($3,600,000 / 20,000) * 2,700 = $486,000
Accumulated Depreciation at December 31,2019
= $522,000 + $486,000
= $1,008,000
18. Book value of equipment on December 31,2019
Book value of equipment on December 31,2019
= Cost of the asset - Accumulated Depreciation on December 31,2019
= $3,800,000 - $1,008,000
= $2,792,000
19. Depreciation for year 2020
The equipment is operated for 2,300 hours. The equipment is sold on September 30,2020.
Depreciation for 2020 = [($3,800,000 - $200,000) / 20,000] * 2,300 = ($3,600,000 / 20,000) * 2,300 = $414,000
20. Book Value as on September 30,2020
Book value of equipment on September 30,2020
= Book value of equipment on December 31,2019 - Depreciation for 2020
= $2,792,000 - $414,000
= $2,378,000