Answer :
Final answer:
We first need to find the depreciable cost, which is $200,000. Then, calculate depreciation per unit as $20 per hour. After determining the total hours used for 2018 and 2019 (4,500 hours), we find the accumulated depreciation to be $90,000.
Explanation:
To calculate the accumulated depreciation, first find out the depreciable cost, which is the acquisition cost minus the salvage value. In this case, the cost of the lathe is $210,000 and the salvage value is $10,000. Therefore, the depreciable cost = $210,000 - $10,000 = $200,000. Then, to find the depreciation per unit, divide the depreciable cost by the total expected use of the asset, in this case, 10,000 hours. Thus, depreciation per unit = $200,000 / 10,000 hours = $20 per hour. As Busy Beaver used the lathe for 2,000 hours in 2018 and 2,500 hours in 2019, the total hours of use over the two years is 2,000 + 2,500 = 4,500 hours. Therefore, the accumulated depreciation at December 31, 2019 = 4,500 hours * $20/hour = $90,000.
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Answer:
$90,000
Explanation:
For computing the accumulated depreciation, first we have to determine the depreciation expense which is shown below:
= (Original cost - residual value) ÷ (estimated production)
= ($210,000 - $10,000) ÷ ($10,000 hours)
= ($200,000) ÷ ($10,000 hours)
= $20
Now for the first year, it would be
= Production hours in first year × depreciation per hours
= 2,000 hours × $20
= $40,000
And, for the second year,
= Production hours in second year × depreciation per hours
= 2,500 hours × $20
= $50,000
So, the accumulated depreciation would be
= $40,000 + $50,000
= $90,000
