Answer:
(A) $23,200
(B) $0.02 per copy
(C) $4,420
Explanation:
Given that,
Cost of equipment = $25,500
Estimated residual value = $2,300
Estimated useful life = 5 years
Estimated Output = 1,160,000 copies
Copies made this year = 221,000
Depreciation refers to the reduction in the value of fixed assets with the passage of time.
(A) The depreciable cost is determined by subtracting the residual value from the cost of acquiring copying equipment.
Depreciable cost:
= Cost of equipment - Estimated residual value
= $25,500 - $2,300
= $23,200
(B) Depreciation rate is calculated by dividing the depreciable cost by the estimated output.
Depreciation rate:
= Depreciable cost ÷ Estimated output
= $23,200 ÷ 1,160,000
= $0.02 per copy
(C) Units-of-output depreciation for the year is calculated by multiplying the depreciation rate with the number of copies made this year.
Units of output depreciation for the year:
= Depreciation rate × Copies made this year
= $0.02 per copy × 221,000
= $4,420
