Answer to Question #107031 in Accounting for Alyssa Nowak

Question

Henry purchased equipment with a cost of $225557 on 1 July 2016. The equipment has an estimated life of 10 years or 108389 units of product. The estimated residual value is $27202. During 2016/17, 14633 units of product were produced with this machinery. Calculate the amount of total accumulated depreciation at 30 June 2017, using units-of-activity depreciation

Answer 1

1 step

the amount of depreciation per unit of output: (225557 - 27202) / 18389 = $10.79 per unit

2 step

the total accumulated depreciation: 14633 * 10.787 = $157840