**Calculating Depreciation using the Units-of-Production Method** On January 1st, the Matthews Band invests $66,600 in new sound equipment. The equipment is projected to be used over a span of five years and is expected to support 200 concerts. By the end of the five-year period, it is estimated that the equipment can be sold for $2,000. During the first year, the band successfully performs 55 concerts. To ascertain the depreciation for the first year using the units-of-production method, follow the steps outlined below: 1. **Determine the Depreciation Per Concert:** - Initial Cost of Equipment: $66,600 - Residual Value (Value at End of 5 Years): $2,000 - Estimated Total Concerts: 200 Depreciation Per Concert = (Initial Cost - Residual Value) / Total Estimated Concerts = ($66,600 - $2,000) / 200 = $64,600 / 200 = $323 per concert 2. **Calculate the Total Depreciation for the First Year:** - Number of Concerts in the First Year: 55 Depreciation in First Year = Depreciation Per Concert * Number of Concerts in First Year = $323 * 55 = $17,765 **Summary of the Calculation Process in Tabular Form:** | **Select formula for the depreciation rate of Units of Production:** | | |----------------------------------------------------------------------|------------------------------------------------------------------| | | | | **Calculate the first year depreciation expense:** | | | Depreciation per concert | (Initial Cost - Residual Value) / Total Estimated Concerts | | Concerts in first year | 55 | | Depreciation in first year | Depreciation Per Concert * Number of Concerts in First Year | The first-year depreciation expense for the Matthews Band, using the units-of-production method, is $17,765.
**Calculating Depreciation using the Units-of-Production Method** On January 1st, the Matthews Band invests $66,600 in new sound equipment. The equipment is projected to be used over a span of five years and is expected to support 200 concerts. By the end of the five-year period, it is estimated that the equipment can be sold for $2,000. During the first year, the band successfully performs 55 concerts. To ascertain the depreciation for the first year using the units-of-production method, follow the steps outlined below: 1. **Determine the Depreciation Per Concert:** - Initial Cost of Equipment: $66,600 - Residual Value (Value at End of 5 Years): $2,000 - Estimated Total Concerts: 200 Depreciation Per Concert = (Initial Cost - Residual Value) / Total Estimated Concerts = ($66,600 - $2,000) / 200 = $64,600 / 200 = $323 per concert 2. **Calculate the Total Depreciation for the First Year:** - Number of Concerts in the First Year: 55 Depreciation in First Year = Depreciation Per Concert * Number of Concerts in First Year = $323 * 55 = $17,765 **Summary of the Calculation Process in Tabular Form:** | **Select formula for the depreciation rate of Units of Production:** | | |----------------------------------------------------------------------|------------------------------------------------------------------| | | | | **Calculate the first year depreciation expense:** | | | Depreciation per concert | (Initial Cost - Residual Value) / Total Estimated Concerts | | Concerts in first year | 55 | | Depreciation in first year | Depreciation Per Concert * Number of Concerts in First Year | The first-year depreciation expense for the Matthews Band, using the units-of-production method, is $17,765.
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Transcribed Image Text:**Calculating Depreciation using the Units-of-Production Method**
On January 1st, the Matthews Band invests $66,600 in new sound equipment. The equipment is projected to be used over a span of five years and is expected to support 200 concerts. By the end of the five-year period, it is estimated that the equipment can be sold for $2,000. During the first year, the band successfully performs 55 concerts.
To ascertain the depreciation for the first year using the units-of-production method, follow the steps outlined below:
1. **Determine the Depreciation Per Concert:**
- Initial Cost of Equipment: $66,600
- Residual Value (Value at End of 5 Years): $2,000
- Estimated Total Concerts: 200
Depreciation Per Concert = (Initial Cost - Residual Value) / Total Estimated Concerts
= ($66,600 - $2,000) / 200
= $64,600 / 200
= $323 per concert
2. **Calculate the Total Depreciation for the First Year:**
- Number of Concerts in the First Year: 55
Depreciation in First Year = Depreciation Per Concert * Number of Concerts in First Year
= $323 * 55
= $17,765
**Summary of the Calculation Process in Tabular Form:**
| **Select formula for the depreciation rate of Units of Production:** | |
|----------------------------------------------------------------------|------------------------------------------------------------------|
| | |
| **Calculate the first year depreciation expense:** | |
| Depreciation per concert | (Initial Cost - Residual Value) / Total Estimated Concerts |
| Concerts in first year | 55 |
| Depreciation in first year | Depreciation Per Concert * Number of Concerts in First Year |
The first-year depreciation expense for the Matthews Band, using the units-of-production method, is $17,765.
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