The Acme Machine Shop has five machines that periodically break down and require service. The average time between breakdowns is
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Answer
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Answer:
Accumulated depreciation balance on 31 December 2019 = $73,326
Explanation:
Total Cost of the machine = $381,150
Salvage value = $18,150
Therefore value to be depreciated = $381,150 - $18,150 = $363,000
Life of asset = 10 years.
Units to be produced = 290,400
Working hours = 25,000
Under the units of output activity method the asset shall be depreciated based on output, but here the output of machinery is 25,000 hours in its life thus, depreciation shall be charged based on number of hours and not on units.
Therefore accumulated depreciation on December 31 2019 shall be based on total hours of 2018 and 2019
= 2,650 + 2,400 = 5,050 hours
Depreciation =
Accumulated depreciation balance on 31 December 2019 = $73,326