ShadyZ Corporation uses the unit-of-production method to estimate amortization.A new asset is purchased for $18,000 that will produce an estimated 100,000 units over its useful life.Estimated residual value is $2,000.What is the amortization rate per unit?
A)$1.60
B)$1.80
C)$0.16
D)$0.18

Question

Quizplus · Accepted Answer

To calculate the amortization rate per unit, we need to first calculate the depreciable cost per unit, which is (Cost - Residual value) / Total estimated units of production.

Thus, depreciable cost per unit = ($18,000 - $2,000) / 100,000 = $0.16

Therefore, the amortization rate per unit is equal to the depreciable cost per unit, which is $0.16. Hence, the correct answer is C.

ShadyZ Corporation Uses the Unit-Of-Production Method to Estimate Amortization