McGraw-Hil ConnectChapter 9 Quiz ?? ezta.mheducation.com/hm.tpx At the beginning

Question

McGraw-Hil ConnectChapter 9 Quiz ?? ezta.mheducation.com/hm.tpx At the beginning of 2015, your company buys a $28,000 piece of equipment that t expects to use for 4 years. The equipment has an estimated residual value of 2,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 47,000 units in 2015, 53,000 units in 2016, 49,000 unitsn 2017, and 51,000 units in 2018 Required: a. Determine the depreciable cost. S 26,000 b. Caleulate the depreciation expense per year under the straight line method. ciation Expense per y c. Use the stralght-line method to prepare a depreciation schedule Year Depreciation Accumulated Net Depreciation Value Acquisition cost 2015 2016 2017 O Type here to search

Explanation / Answer

Solution a:

Original cost of equipment = $28,000

Salvage Value = $2,000

Depreciable Cost = $28,000 - $2,000 = $26,000

Solution b:

Life of Equipment = 4 years

Depreciation expense per year under staright line method = (Original cost - Salvage value) / Life of equipment

= ($28,000 - $2,000) / 4 = $6,500

Solution c:

Solution d:

Depreciation rate per unit (Unit of production method) = Depreciable cost / Expected production units

= $26,000 / 200000 = $0.13 per unit

Solution e:

Depreciation Schedule - Straight Line Method Year Depreciation Expense Accumulated Depreciation Net Book Value Acquisition Cost $28,000.00 2015 $6,500.00 $6,500.00 $21,500.00 2016 $6,500.00 $13,000.00 $15,000.00 2017 $6,500.00 $19,500.00 $8,500.00 2018 $6,500.00 $26,000.00 $2,000.00

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