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during the construction of a highway bypass, earthmoving equipment costing $40,000 was purchased for use in transporting fill from the borrow pit. at the end of the 4-year project, the equipment will be sold for $20,000. the schedule for moving fill calls for a total of 100,000 cubic feet during the project. in the first year, 40% of the total fill is required; in the second year, 30%; in the third year, 25%; and in the final year, the remaining 5%. determine the unitsof-production depreciation schedule for the equipment

Answer :

TUTORCONSORTIUM609GO

The depreciation value of the machine is 20,000.

What is a depreciation meaning?

  • Depreciation is a reduction in the fixed assets' book value.
  • Depreciation is the process by which assets lose value as a result of ageing and obsolescence. Depreciation continues throughout an asset's useful life.

How do I calculate the depreciation value?

The given data is,

Cost of earthmoving equipment=$40,000

The equipment will be sold = $20,000

The depreciation value of the machine is $40,000- $20,000= 20,000

The first year it is 40% its units utility, means the depreciation = 20,000*40%= $8000,

The second year =20,000*30%

=$6000

The third year =20,000*25%

=$5000

the fourth year=20,000*5%

= $1000.

The depreciation value of the machine is 20,000.

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