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, 35 000 units; Year 3, 18 000 units; Year 4, 12 000 units. The asset cost $ 100 000 and associated installation costs amounted to $20 000 and residual value is $5000. The amount of depreciation charged in the first year is:

Question

Quizplus · Accepted Answer

Depreciation = (Cost + Installation costs - Residual value) / Useful life in units= (100,000 + 20,000 - 5,000) / (35,000 + 35,000 + 18,000 + 12,000)= 115,000 / 100,000= $1.15 per unitDepreciation for the first year = 1.15 * 35,000= $40,250

Replicator Limited Acquired an Item of Plant with an Expected