2 A heavy construction firm has been awarded acontract to build a large concrete dam. It is expectedthat a total of 8 years will be required to complete thework. The firm will buy $600,000 worth of specialequipment for the job. During the preparation of thejob cost estimate, the following utilization schedulewas computed for the special equipment:UtilizationUtilizationYear(hr/yr)Year(hr/yr)16000800240006.800340007.2200416008.2200At the end of the job, it is estimated that theequipment can be sold at auction for $60,000.(a) Compute the straight-line depreciation schedule.(b) Compute the unit-of-production depreciationschedule.

Depreciation could be computed under the straight-line method or unit-of-production method. Under…

Answered: (a) Compute the straight-line…

Business

Accounting

(a) Compute the straight-line depreciation schedule. (b) Compute the unit-of-production depreciation schedule.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

2 A heavy construction firm has been awarded a
contract to build a large concrete dam. It is expected
that a total of 8 years will be required to complete the
work. The firm will buy $600,000 worth of special
equipment for the job. During the preparation of the
job cost estimate, the following utilization schedule
was computed for the special equipment:
Utilization
Utilization
Year
(hr/yr)
Year
(hr/yr)
1
6000
800
2
4000
6.
800
3
4000
7.
2200
4
1600
8.
2200
At the end of the job, it is estimated that the
equipment can be sold at auction for $60,000.
(a) Compute the straight-line depreciation schedule.
(b) Compute the unit-of-production depreciation
schedule.

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