Question: Units-of-Production Method A machine is purchased January 1 at a cost

Question

Question: Units-of-Production Method A machine is purchased January 1 at a cost of $56,290. It is expected to produce 129,000 units and have a salvage value of $3,400 at the end of its useful life. Units produced are as follows: Year 1 10,400 Year 2 8,000 Year 3 11,300 Year 4 15,700 Year 5 11,300 Required: Prepare a schedule showing depreciation for each year and the book value at the end of each year using the units-of-production method (round calculations to two decimal places). Units-of-Production Method Beginning Book Value Annual Depreciation Ending Book Value year 1S$$ year 2 $ $ s year 3 $ $ $ year 4 $ $$

Explanation / Answer

Depreciation =

Number of Units Produced

× (Cost Salvage Value)

Life in Number of Units

Depreciation Schedule

Year

Opening book value

Depreciation

Closing book value

1

56,290-

3400=52,890

52890*10400/129000

=4264

48,626

2

48,626

52890*8000/129000

=3280

45,346

3

45,346

52890*11300/129000

=4633

40,713

4

40,713

52890*15700/129000

=6437

34,276

5

34,276

52890*11300/129000

=4633

29,643

Depreciation =

Number of Units Produced

× (Cost Salvage Value)

Life in Number of Units

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