On January 1,2012,Rugh Company purchased equipment with a list price of $12,000 with a 2% cash discount.The equipment was delivered under terms of FOB destination and freight costs amounted to $400.A total of $1,000 was paid for installation and testing.During the first year,Rugh paid $300 for insurance on the equipment and another $250 for routine maintenance and repairs.Rugh uses the units-of-production method of depreciation.Useful life is estimated at 5 years or 300,000 units and estimated salvage value is $2,000.During 2012,the equipment produced 60,000 units.What is the amount of depreciation for 2012?

Question

Quizplus · Accepted Answer

Depreciation expense = (Cost of equipment - Salvage value) / Useful life in units * Units produced= ($12,000 - $2,000) / 300,000 * 60,000= $2,160

On January 1,2012,Rugh Company Purchased Equipment with a List Price