On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last eight years and have a residual value of $4,000. During its eight-year life, the equipment is expected to produce 250,000 units of product. In 2018 and 2019, 42,000 and 76,000 units respectively were produced.
-Required:
Compute depreciation for 2018 and 2019 and the book value of the spooler at December 31, 2018 and 2019, assuming the units-of-production is used.

Question

On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last eight years and have a residual value of $4,000. During its eight-year life, the equipment is expected to produce 250,000 units of product. In 2018 and 2019, 42,000 and 76,000 units respectively were produced. 
-Required:
Compute depreciation for 2018 and 2019 and the book value of the spooler at December 31, 2018 and 2019, assuming the units-of-production is used.

Quizplus · Accepted Answer

The Answer of On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last eight years and have a residual value of $4,000. During its eight-year life, the equipment is expected to produce 250,000 units of product. In 2018 and 2019, 42,000 and 76,000 units respectively were produced. 
-Required:
Compute depreciation for 2018 and 2019 and the book value of the spooler at December 31, 2018 and 2019, assuming the units-of-production is used.