Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
2nd Edition
ISBN: 9780134833118
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 11, Problem 11.10BE
To determine
Depreciation expense for first 2 years and net book value of the machinery after the end of 2nd year.
Given information:
Cost of the machine is $250,000.
Useful life is 10 years.
Residual value is $50,000.
Total expected output is 100,000 units.
Actual output in first year was 12,000 units.
Actual output during second year was 8,000 units.
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Students have asked these similar questions
A utility vehicle purchased by Knox industries should last 110,000 miles .  the accusation cost was 21,200 and the salvage value is 1,913. Using the units of production depreciation method given the annual usage information calculate the accumulated depreciation at the end of year to round your depreciation per unit to three decimal places run your answer to the nearest cent.  year one 22,029. 
Your two 22,724.  Year 3 23,420. year 4 23,188. 
Answer key
A.3,976.70
B.4,098.50
C.7,831.78
D.13,368.23

2. Please explain the Units-of-Output depreciation method and give an example of when it might be used.
3. Suppose that a machine had a units-of-production depreciation rate of $2 per operating hour and that the machine was used 20,000 hours the first year. Please calculate the depreciation for the first year and show what the journal entry would be.
4. Can we assume that the first year's depreciation expense (calculated in question 2 above) will also be the depreciation expense for subsequent years? Why or why not?
Calculate the amount of depreciation expense that Novak should record for Machine B each year of its useful life under the
following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0
decimal places, e.g. 2,125.)
(1) Novak uses the straight-line method of depreciation.
(2) Novak uses the declining-balance method. The rate used is twice the straight-line rate.
(3)
Novak uses the units-of-activity method and estimates that the useful life of the machine is 155,000 units. Actual
usage is as follows: 2022, 52,500 units; 2023, 42,500 units; 2024, 32,500 units; and 2025, 27,500 units.
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Chapter 11 Solutions
Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
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