Lopez Corporation purchased equipment with a cost of $400,000 at the beginning of 2011. The equipment has an estimated life of 8 years or 100,000 units of product. The estimated salvage value is $50,000. During 2011, 12,000 units of product were produced with this machinery. Determine the following:
A) Amount of total accumulated depreciation at December 31, 2011, using units-of-activity depreciation
B) Book value at the end of 2011 using straight-line depreciation
C) Whywould the company choose units-of-activity depreciation instead of straight-line?

Question

Lopez Corporation purchased equipment with a cost of $400,000 at the beginning of 2011. The equipment has an estimated life of 8 years or 100,000 units of product. The estimated salvage value is $50,000. During 2011, 12,000 units of product were produced with this machinery. Determine the following:
 A) Amount of total accumulated depreciation at December 31, 2011, using units-of-activity depreciation
B) Book value at the end of 2011 using straight-line depreciation
C) Whywould the company choose units-of-activity depreciation instead of straight-line?

Quizplus · Accepted Answer

The Answer of Lopez Corporation purchased equipment with a cost of $400,000 at the beginning of 2011. The equipment has an estimated life of 8 years or 100,000 units of product. The estimated salvage value is $50,000. During 2011, 12,000 units of product were produced with this machinery. Determine the following:
 A) Amount of total accumulated depreciation at December 31, 2011, using units-of-activity depreciation
B) Book value at the end of 2011 using straight-line depreciation
C) Whywould the company choose units-of-activity depreciation instead of straight-line?

Lopez Corporation Purchased Equipment with a Cost of $400,000 at the Beginning