Clean Air Company makes and sells cloth masks. The company purchased a new automated sewing machine at the beginning of Year 1 for $71,000. The machine is expected to have a two-year useful life and a $20,100 salvage value. The expected mask production is estimated at 101,800 masks. Actual print production for the two years was as follows: Year 1 Year 2 Total 56,000 49,000 105,000 Required: Compute the depreciation expense for each of the two years, using units of production depreciation. Depreciation expense Year 1 Year 2
Clean Air Company makes and sells cloth masks. The company purchased a new automated sewing machine at the beginning of Year 1 for $71,000. The machine is expected to have a two-year useful life and a $20,100 salvage value. The expected mask production is estimated at 101,800 masks. Actual print production for the two years was as follows: Year 1 Year 2 Total 56,000 49,000 105,000 Required: Compute the depreciation expense for each of the two years, using units of production depreciation. Depreciation expense Year 1 Year 2
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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Transcribed Image Text:Brief Exercise 8-4 (Algo) Depreciation expense using the units-of-production method LO 8-4
Clean Air Company makes and sells cloth masks. The company purchased a new automated sewing machine at the beginning of Year
1 for $71,000. The machine is expected to have a two-year useful life and a $20,100 salvage value. The expected mask production is
estimated at 101,800 masks. Actual print production for the two years was as follows:
Year 11
Year 21
Total
56,000
49,000
105,000
Required:
Compute the depreciation expense for each of the two years, using units of production depreciation.
Depreciation expense
Year 1
Year 2
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