On January 1,Year 1,Milton Manufacturing Company purchased equipment with a list price of $88,000.A total of $4,000 was paid for installation and testing.During the first year,Milton paid $6,000 for insurance on the equipment and another $2,200 for routine maintenance and repairs.Milton uses the units-of-production method of depreciation.Useful life is estimated at 100,000 units,and estimated salvage value is $8,000.During Year 1,the equipment produced 13,000 units.What is the amount of depreciation for Year 1?

Question

Quizplus · Accepted Answer

Cost of machine = List price of $88,000 + Installation costs of $4,000 = $92,000
Depreciation expense = [(Cost of $92,000 - Salvage value of $8,000)÷ Estimate of 100,000 units] × Units produced during Year 1 of 13,000 = $10,920

On January 1,Year 1,Milton Manufacturing Company Purchased Equipment with a List