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    Unit of Production Method of Depreciation

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    An item of equipment acquired on Jan 1 at a cost of $60,000 has an estimated use of 25,000 hours. During the first three years, the equipment was used 5,000 hours, 6,000 hours, and 4,000 hours, respectively. The estimated salvage value of the equipment is $10,000.

    Determine the depreciation for each of the three years, using the unit of production method.

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    Solution Preview

    The units-of-production method determines depreciation expense based on the amount the asset is used. The length of life of an asset is expressed in a form of productive capacity.
    The initial ...

    Solution Summary

    Basic calculations with explanation included on how to find the deprecation of equipment for 3 years using the unit of production method.