Boston Corp. purchased equipment with a cost of $70,000 at the beginning of 2015. The equipment has an estimated life of 25 years or 25,000 units of product. The estimated residual value is $7,500. During 2015, 1,100 units of product were produced with this machinery. Determine the following:
A. Amount of total accumulated depreciation at December 31, 2015, using units-of-production depreciation
B. Book value at the end of 2015 using straight-line depreciation
C. Why would the company choose units-of-production depreciation instead of straight-line?

Question

Quizplus · Accepted Answer

The Answer of Boston Corp. purchased equipment with a cost of $70,000 at the beginning of 2015. The equipment has an estimated life of 25 years or 25,000 units of product. The estimated residual value is $7,500. During 2015, 1,100 units of product were produced with this machinery. Determine the following:
A. Amount of total accumulated depreciation at December 31, 2015, using units-of-production depreciation
B. Book value at the end of 2015 using straight-line depreciation
C. Why would the company choose units-of-production depreciation instead of straight-line?