On January 1, 2013, LaMonte Paint and Repair purchased a piece of equipment that cost $300,000.It has an estimated useful life 10 years over which it was expected to produce 100,000 units of output.The equipment is expected to have an estimated residual value of $80,000.The company amortizes all equipment using the units-of-production method.In the first two years of operation, the asset produced units of output as follows: 2013, 18,000 units; 2014, 15,000 units.The accounting year ends December 31.What is the amount of depreciation expense and in the accumulated depreciation account (after adjusting entries) at the end of 2014? Depreciation Accumulated
a)
\begin{tabular} { l r }
Expense & Depreciation \
\hline$\$ 45,000$ & $\$ 99,000$ \
$\$ 33,000$ & $\$ 72,600$ \
$\$ 72,600$ & $\$ 72,600$ \
$\$ 33,000$ & $\$ 33,000$
\end{tabular}

Question

On January 1, 2013, LaMonte Paint and Repair purchased a piece of equipment that cost $300,000.It has an estimated useful life 10 years over which it was expected to produce 100,000 units of output.The equipment is expected to have an estimated residual value of $80,000.The company amortizes all equipment using the units-of-production method.In the first two years of operation, the asset produced units of output as follows: 2013, 18,000 units; 2014, 15,000 units.The accounting year ends December 31.What is the amount of depreciation expense and in the accumulated depreciation account (after adjusting entries) at the end of 2014? Depreciation Accumulated
a)
\begin{tabular} { l r } 
Expense & Depreciation \
\hline$\$ 45,000$ & $\$ 99,000$ \
$\$ 33,000$ & $\$ 72,600$ \
$\$ 72,600$ & $\$ 72,600$ \
$\$ 33,000$ & $\$ 33,000$
\end{tabular}

Quizplus · Accepted Answer

The depreciation expense for each year is calculated based on the units-of-production method. The cost of the equipment ($300,000) minus its residual value ($80,000) gives us a depreciable base of $220,000. The total expected production is 100,000 units, so the depreciation per unit is $220,000 / 100,000 = $2.20 per unit. For 2013, the depreciation expense is 18,000 units * $2.20 = $39,600. For 2014, it's 15,000 units * $2.20 = $33,000. The accumulated depreciation at the end of 2014 is the sum of the depreciation expenses for 2013 and 2014, which is $39,600 + $33,000 = $72,600.

On January 1, 2013, LaMonte Paint and Repair Purchased a Piece