Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below.] On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $30,900. The drill press is expected to last 10 years and has a residual value of $6,100. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 25,500 and 85,000 units, respectively, were produced. Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the sum-of-the-years'-digits method is used. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

Explanation / Answer

Depreciable cost = (30,900-6100) 24800 n*(n+1)/2 = (10*11)/2 55 Depreciation expense Depreciation for year 2018 = 24,800*10/55= 4509 Depreciation for year 2019 = 24,800*9/55= 4058 book value = total cost- depreciation expense Book value 2018 (30900-4509) 26391 2019 (26391-4058) 22333

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