Chapter 7, Problem 7.16E

To determine

Concept Introduction:

Units of Production method of depreciation:

This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset is allocated on the basis of unit of production during its estimated life. The formula to calculate the deprecation under units of production method is as follows:

  $Depreciation=\frac{\left(Cost-SalvageValue\right)\times Unitsfortheperiod}{Estimatedlifeinunits}$

Requirement-1:

To Calculate:

The Amortization expense for the year 20Y4

To determine

Concept Introduction:

Units of Production method of depreciation:

This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset is allocated on the basis of unit of production during its estimated life. The formula to calculate the deprecation under units of production method is as follows:

  $Depreciation=\frac{\left(Cost-SalvageValue\right)\times Unitsfortheperiod}{Estimatedlifeinunits}$

Requirement-2:

To Indicate:

The effect of Amortization expense on accounts