Question

Required information SB Problem [The following information applies to the questions displayed below.] On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $27,200. The drill press is expected to last 10 years and has a residual value of $5,200. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 21,000 and 76,000 units, respectively, were produced. Problem 11-139 Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the straight-line method is used.

Answer 1

Cost of drill press	$   27,200
Less: Residual value	$   (5,200)
Depreciable value	$   22,000
Life of the Drill Press	10 Years
Depreciation for 2018 ($22,000/10)	$     2,200
Depreciation for 2019 ($22,000/10)	$     2,200
Book value on 2018 ($27,200-$2,200)	$   25,000
Book value on 2019 ($25,000-$2,200)	$   22,800

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