Billu Limited purchased equipment on January 1, 2019 for $275,000. It was estimated that the equipment would have a residual value of $25,000 at the end of its useful life. The asset's useful life was estimated at 5 years or 10,000 units of output. The company has a December 31 year end. Additional Information
$$\begin{array} {| l | l| }
\hline \text { Year } & \text { Units of Output } \
\hline 2019 & 2,100 \
\hline 2020 & 2,000 \
\hline 2021 & 1,700 \
\hline 022 & 2,300 \
\hline 2023 & 1,900 \
\hline
\end{array}$$ Assuming the company uses the units-of-production depreciation method, calculate the accumulated depreciation at the end of 2022.

Question

Billu Limited purchased equipment on January 1, 2019 for $275,000. It was estimated that the equipment would have a residual value of $25,000 at the end of its useful life. The asset's useful life was estimated at 5 years or 10,000 units of output. The company has a December 31 year end. Additional Information
$$\begin{array} {| l | l| } 
\hline \text { Year } & \text { Units of Output } \
\hline 2019 & 2,100 \
\hline 2020 & 2,000 \
\hline 2021 & 1,700 \
\hline 022 & 2,300 \
\hline 2023 & 1,900 \
\hline
\end{array}$$ Assuming the company uses the units-of-production depreciation method, calculate the accumulated depreciation at the end of 2022.

Quizplus · Accepted Answer

The total depreciable amount is $275,000 - $25,000 = $250,000. The depreciation per unit is $250,000 / 10,000 units = $25 per unit. The total units produced by the end of 2022 is 2,100 + 2,000 + 1,700 + 2,300 = 8,100 units. Therefore, accumulated depreciation is 8,100 units * $25 = $202,500.

Billu Limited Purchased Equipment on January 1, 2019 for $275,000