Question

Sophia Company purchased equipment costing $120,000. The equipment has a residual value of $20,000 and an estimated useful life of 50,000 units. Using the units-of-activity method, calculate the depreciation for year 1 and year 2, assuming that the company produced 10,000 units in year 1 and 23,000 units in year 2.

Answer 1

Year 1 : $20000

Year 2 : $460000

Step-by-step explanation:

Year 1 calculation:

120000-20000/50000*10000 =$20000

Year 2 calculation:

120000-20000/50000*23000=$46000