The cost of equipment purchased by Titan Tools Ltd. on July 1, 2021, is $120,000. It is estimated that the machine will have a $6,000 salvage value at the end of its service life. Its service life is estimated at 10 years, its total working hours are estimated at 50,000, and its total production is estimated at 600,000 units. In 2021, the machine was operated for 4,500 hours and produced 58,000 units. In 2022, the machine was operated for 5,200 hours and produced 62,000 units. Requirement: Compute depreciation expense on the machine for the year ending December 31, 2021, and the year ending December 31, 2022, using the straight-line method.

The cost of equipment purchased by Titan Tools Ltd. on July 1, 2021, is $120,000. It is estimated that the machine will have a $6,000 salvage value at the end of its service life. Its service life is estimated at 10 years, its total working hours are estimated at 50,000, and its total production is estimated at 600,000 units. In 2021, the machine was operated for 4,500 hours and produced 58,000 units. In 2022, the machine was operated for 5,200 hours and produced 62,000 units. Requirement: Compute depreciation expense on the machine for the year ending December 31, 2021, and the year ending December 31, 2022, using the straight-line 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 13P

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