Question

On January 1, 2021, the Allegheny Corporation purchased equipment for $116,000. The estimated service life of the equipment is 10 years and the estimated residual value is $6,000. The equipment is expected to produce 260,000 units during its life.

Required:
Calculate depreciation for 2021 and 2022 using each of the following methods.

Units of production (units produced in 2021, 32,000; units produced in 2022, 27,000). (Round "Depreciation per unit rate" answers to 2 decimal places.)

	Select formula for Units of Production Depreciation: Calculate 2021 depreciation expense: Depreciation per unit rate Units produced in 2021 Depreciation in 2021 Calculate 2022 depreciation expense: Depreciation per unit rate Units produced in 2022 Depreciation in 2022

Answer 1

Depreciation expense per unit = (Cost of equipment - Residual value)/Expected production unit

= (116,000 - 6,000)/260,000

= 110,000/260,000

= $0.42

Select formula for Units of Production Depreciation:
Calculate 2021 depreciation expense:
Depreciation per unit rate	0.42
Units produced in 2021	32,000
Depreciation in 2021	13,440
Calculate 2022 depreciation expense:
Depreciation per unit rate	0.42
Units produced in 2022	27,000
Depreciation in 2022	11,340

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