Question 10.3: Units-of-Production Depreciation Equipment acquired at a cos......

Financial Accounting [EXP-43430]

Units-of-Production Depreciation

Equipment acquired at a cost of $180,000 has an estimated residual value of $10,000, has an estimated useful life of 40,000 hours, and was operated 3,600 hours during the year. Determine (a) the depreciable cost, (b) the depreciation rate, and (c) the units-of-production depreciation for the year.

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a. $170,000 ($180,000 – $10,000)

b. $4.25 per hour ($170,000/40,000 hours)

c. $15,300 (3,600 hours × $4.25)

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