Question

On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $36,000. The drill press is expected to last 10 years and has a residual value of $6,000. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 25,000 and 84,000 units, respectively, were produced.
1. Compute depreciation expense, accumulated depreciation and the book value of the drill press at December 31, 2018 and 2019, assuming the straight-line method is used.
2. Compute depreciation expense, accumulated depreciation and the book value of the drill press at December 31, 2018 and 2019, assuming the double-declining-balance method is used.
3. Compute depreciation expense, accumulated depreciation and the book value of the drill press at December 31, 2018 and 2019, assuming the units-of-production method is used.

Answer 1

Answer:

$2,000

Explanation:

1. straight-line method

depreciation expense = $3,000 and $3,000

accumulated depreciation = $6,000

book value $30,000

2. double-declining-balance method

depreciation expense $7,200 and $5,760

accumulated depreciation = $12,960

book value = $23,040

3. units-of-production method is used.

depreciation expense $1,500 and $5,040

accumulated depreciation = $6,540

book value = $29,460