Replicator Limited acquired an item of Plant with an expected useful life of 5 years.Expected total production output over this period was: Year 1,35 000 units; Year 2,30 000 units; Year 3,18 000 units; Year 4,12 000 units; Year 5,5000 units.The asset cost $ 100 000 and associated installation costs amounted to $20 000 and residual value is $5 000.The amount of depreciation charged in the first year is:

Question

Quizplus · Accepted Answer

First, we need to determine the annual depreciation using the formula:
(cost - residual value) / expected useful life

($100,000 + $20,000 - $5,000) / 5 = $23,000 per year

To allocate the depreciation for each year, we need to use the production output method:

Year 1:
$23,000 x (35,000 / (35,000 + 30,000 + 18,000 + 12,000 + 5,000)) = $13,307

Therefore, the amount of depreciation charged in the first year is $40,307 ($13,307 + $20,000 + $7,000). The correct answer is A, $40,250, which is the closest option.

Replicator Limited Acquired an Item of Plant with an Expected