On March 24, 2017, Lion Ltd.purchased a new machine for $100,000.This machine has an eight-year estimated useful life, an estimated residual value of $5,000, and is expected to produce 190,000 units over its useful life.The machine produced 11,000 units in 2017 and 13,000 units in 2018.Using the unit of production method, to the nearest dollar, the related Accumulated Depreciation account on the adjusted trial balance at December 31, 2018 would be
A)$5,500.
B)$6,500.
C)$12,000.
D)$12,632.

Question

Quizplus · Accepted Answer

The unit of production depreciation expense per unit is calculated as: (Cost - Residual Value) / Total Estimated Units = ($100,000 - $5,000) / 190,000 = $0.5 per unit. For 2017, depreciation is 11,000 units * $0.5 = $5,500. For 2018, depreciation is 13,000 units * $0.5 = $6,500. Total accumulated depreciation by the end of 2018 is $5,500 + $6,500 = $12,000.