At the beginning of 2015 your company buys a 31600 piece of

At the beginning of 2015, your company buys a $31,600 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 4,000. The company expects to produoe a total of 200,000 units. Actual production is as follows: 43,000 units in 2015, 46,000 units in 2016, 40,000 units in 2017, and 65,000 units in 2018. Required: a. Determine the depreciable cost b. Caloulate the depreciation expense per year under the straight-line method. c. Use the straight-line method to prepare a depreciation schedule. Year Value Aoquisition cost 2015 2016 2018 d. Ca suiaze the depreciasion rate cer unt under the un ta-o- decisal placesj method (Round your answer to 2 Type here to search

Solution

a.

Depreciable cost = Cost - Residual value

= 31,600 - 4,000

= 27,600

b.

Depreciation expense per year = Depreciable cost / Useful life

= 27,600 / 4

= 6,900

c.

d.

Depreciation rate per unit = (cost - salvage value) / total estimated units

= (31,600 - 4,000) / 200,000

= 0.138 per unit

e.

Year	Depreciation Expense	Accumulated Depreciation	Net Book Value
Acquision cost			31,600
2015	6,900	6,900	24,700
2016	6,900	13,800	17,800
2017	6,900	20,700	10,900
2018	6,900	34,500	4,000