**Hobart Mfg. Co. Drill Press Depreciation Calculation**On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $21,900. The drill press is expected to last 10 years and has a residual value of $5,100. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 20,500 and 75,000 units, respectively, were produced.**Required:**Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018, and 2019, assuming the units-of-production method is used. (Round depreciation per unit to 2 decimal places.)**Table:**| | 2018 | 2019 ||----------|------------|------------|| Depreciation | | || Book Values | | |### Explanation:To find the depreciation for 2018 and 2019, use the units-of-production method:1. **Calculate Depreciation Per Unit:** - Total Cost: $21,900 - Residual Value: $5,100 - Depreciable Amount: $21,900 - $5,100 = $16,800 - Total Expected Production: 500,000 units - Depreciation Per Unit = $16,800 / 500,000 units = $0.0336 (rounded to $0.03 for simplicity)2. **Calculate Depreciation for Each Year:** - 2018 Depreciation: 20,500 units x $0.03 = $615 - 2019 Depreciation: 75,000 units x $0.03 = $2,2503. **Calculate Book Values:** - 2018 Book Value: $21,900 - $615 = $21,285 - 2019 Book Value: $21,285 - $2,250 = $19,035

Deprecation per unit = (Cost of drill press - Residual value)/ Expected production in units = (21900-5100)/500000 = $0.03 per unitDepreciation for 2018 = No. of units produced x Deprecation per unit = 20500 units x $0.03 per unit = $615 Book value for 2018 = Cost of drill press - Depreciation for 2018 = 21900-615 = $21,285 Depreciation for 2019 = No. of units produced x Deprecation per unit = 75000 units x $0.03 per unit = $2,250 Book value for 2019 = Book value for 2018 - Depreciation for 2019 = 21,285-2250 = $19,035

Business

Accounting

On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $21,900. The drill press is expected to last 10 years and has a residual value of $5.100. During its 10- year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 20,500 and 75,000 units, respectively, were produced. Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the units-of-production method is used. (Round depreciation per unit to 2 decimal places.) 2018 2019 Depreciation Book Values

On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $21,900. The drill press is expected to last 10 years and has a residual value of $5.100. During its 10- year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 20,500 and 75,000 units, respectively, were produced. Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the units-of-production method is used. (Round depreciation per unit to 2 decimal places.) 2018 2019 Depreciation Book Values

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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