Question

Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,520,000. Harding paid $385,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $407,000; Building, $1,210,000 and Equipment, $803,000. (Round your intermediate percentages to the nearest whole number: i.e 0.054231 = 5%. Do not round any other intermediate calculations.) Assume that Harding uses the units-of-production method when depreciating its equipment. Harding estimates that the purchased equipment will produce 1,060,000 units over its 5-year useful life and has salvage value of $18,000. Harding produced 271,000 units with the equipment by the end of the first year of purchase. Which amount below is closest to the amount Harding will record for depreciation expense for the equipment in the first year?

Answer 1

Answer:

$123,630.2

Explanation:

Harding Corporation

33%× $1,520,000=$501,600

$501,600-$18,000=$483,600

$483,600/$1,060,000 units

=$0.4562

=45.62 per unit

$0.4562x 271,000 units = $123,630.2

Or

($501,600 cost of equipment (33% of $1,520,000 purchase price) minus $18,000 salvage value) / $1,060,000 units = $0.4562 per unit.

$0.4562x 271,000 units = $123,630.2

Therefore the amount below which is closest to the amount Harding will record for depreciation expense for the equipment in the first year is $123,630