A machine costing $70,000 with a four-year life and an estimated $5,000 salvage value is installed in Luther Company's factory on January 1, 2022. The factory manager estimates the machine will produce 600,000 units of product during its life according to this schedule: 90,000 in Year 1, 270,000 in Year 2, 120,000 in Year 3, 120,000 in Year 4. Complete Journal Entry for Units of Production Depreciation in YEAR 1 (2022) Use the Units of Production method to prepare a full depreciation schedule Year 2022 2023 2024 2025 YEAR 1 Depreciation $ $ $ $ Annual Depreciation Expense Account Units of Production Depreciation Equipment Cost . (Please show all calculations) . $ Debit . $ $ $ $ Accumulated Depreciation. Credit . Book Value $ $ $ $ . .
A machine costing $70,000 with a four-year life and an estimated $5,000 salvage value is installed in Luther Company's factory on January 1, 2022. The factory manager estimates the machine will produce 600,000 units of product during its life according to this schedule: 90,000 in Year 1, 270,000 in Year 2, 120,000 in Year 3, 120,000 in Year 4. Complete Journal Entry for Units of Production Depreciation in YEAR 1 (2022) Use the Units of Production method to prepare a full depreciation schedule Year 2022 2023 2024 2025 YEAR 1 Depreciation $ $ $ $ Annual Depreciation Expense Account Units of Production Depreciation Equipment Cost . (Please show all calculations) . $ Debit . $ $ $ $ Accumulated Depreciation. Credit . Book Value $ $ $ $ . .
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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A machine costing $70,000 with a four-year life and an estimated $5,000 salvage value is installed in Luther
Company's factory on January 1, 2022. The factory manager estimates the machine will produce 600,000
units of product during its life according to this schedule: 90,000 in Year 1, 270,000 in Year 2, 120,000 in Year
3, 120,000 in Year 4.
Complete Journal Entry for Units of Production Depreciation in YEAR 1 (2022)
Use the Units of Production method to prepare a full depreciation schedule
Year
2022
2023
2024
2025
YEAR 1
Depreciation
$
$
$
$
Annual Depreciation
Expense
Account
Units of Production Depreciation
.
.
(Please show all calculations)
.
$
Equipment Cost
Debit
$
$
$
$
Accumulated
Depreciation
Credit
.
Book Value
$
$
$
$
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