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

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The total cost of the asset is $120,000 ($100,000 + $20,000). The total expected production output is 100,000 units (35,000 + 35,000 + 18,000 + 12,000). The depreciation per unit is ($120,000 - $5,000) / 100,000 = $1.15. For Year 1, the depreciation is 35,000 units * $1.15 = $40,250.

Replicator Limited Acquired an Item of Plant with an Expected