What would be the amount of amortization expense in year 2 using the units-of-production method?
A)$6,500.00
B)$5,900.00
C)$10,400.00
D)$6,555.55

Question

Quizplus · Accepted Answer

To calculate the amortization expense using units-of-production method, we need to find the depreciation rate per unit first.

Depreciation rate per unit = (Cost of asset - Residual value) / Total estimated units of production
= ($30,000 - $5,000) / 10,000 = $2.50

Then, we can calculate the amortization expense using the following formula:
Amortization expense = Depreciation rate per unit x Actual units produced during the year

In year 2, the actual units produced are 2,622. Therefore, 
Amortization expense = $2.50 x 2,622 = $6,555.55

Therefore, the correct answer is D.

What Would Be the Amount of Amortization Expense in Year