AccountingPro purchased equipment on January 1, 2009 for $275,000. The asset's useful life was estimated at 5 years or 10,000 units of output, with no residual value. The company has a December 31 year end. Additional Information
Assuming the company uses the units-of-production depreciation method, what is the depreciation rate per unit for 2013?

Question

AccountingPro purchased equipment on January 1, 2009 for $275,000. The asset's useful life was estimated at 5 years or 10,000 units of output, with no residual value. The company has a December 31 year end. Additional Information
 Assuming the company uses the units-of-production depreciation method, what is the depreciation rate per unit for 2013?

Quizplus · Accepted Answer

The book value of the equipment at the beginning of the year 2013 can be calculated as follows:

Depreciation rate per unit = (Cost of equipment - Residual value) / Total units of output
Depreciation rate per unit = ($275,000 - $0) / 10,000 units = $27.50

Units produced in 2013 is not given. Therefore, we cannot calculate the depreciation expense for 2013. However, the depreciation rate per unit for 2013 will be $27.50.

AccountingPro Purchased Equipment on January 1, 2009 for $275,000