Yazzie Incorporated bought a machine at the beginning of the year at a cost of $34,000. The estimated useful life was five years and the residual value was $2,000. Assume the estimated productive life of the machine is 16,000 units. Expected annual production was year 1, 3,200 units; year 2, 4,200 units; year 3, 3,200 units; year 4, 3,200 units; and year 5, 2,200 units. Required: Complete a depreciation schedule for the units-of-production method. Prepare the journal entry to record Year 2 depreciation.
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.
E9-7 (Algo) Computing and Recording Units-of-Production Depreciation [LO 9-3]
Yazzie Incorporated bought a machine at the beginning of the year at a cost of $34,000. The estimated useful life was five years and the residual value was $2,000. Assume the estimated productive life of the machine is 16,000 units. Expected annual production was year 1, 3,200 units; year 2, 4,200 units; year 3, 3,200 units; year 4, 3,200 units; and year 5, 2,200 units.
Required:
- Complete a depreciation schedule for the units-of-production method.
- Prepare the
journal entry to record Year 2 depreciation.


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