Blueridge Manufacturing purchased equipment for $230,000 on January 1, 2020. The equipment is estimated to have a useful life of 15 years, a salvage value of $20,000, production of 105,000 units, and working hours of 55,000. In 2020, the company used the equipment for 8,250 hours and produced 16,500 units. Compute the depreciation under the working hours method.

Blueridge Manufacturing purchased equipment for $230,000 on January 1, 2020. The equipment is estimated to have a useful life of 15 years, a salvage value of $20,000, production of 105,000 units, and working hours of 55,000. In 2020, the company used the equipment for 8,250 hours and produced 16,500 units. Compute the depreciation under the working hours method.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...

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On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
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