Question

On January 1, 2019, ABC Company purchased a new piece of equipment. The equipment was assigned...

On January 1, 2019, ABC Company purchased a new piece of equipment.
The equipment was assigned a $7,000 residual value and is expected
to produce a total of 60,000 units over its life. The depreciation
expense reported on the equipment for 2019 was $10,734. During 2020,
the equipment was used to produce 9,000 units. At December 31, 2020,
the book value of the equipment was $57,466. ABC Company is using the
units-of-production depreciation method to depreciate the equipment.

Calculate the original cost paid by ABC Company to purchase the
equipment on January 1, 2019.
Business   Accounting   
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Answer #1
Cost of Equipment X
Less: Residual Value 7000
Net Depreciable Value X-7000
Expected Production 60000
Depreciation PU (X-7000)/60000
Year Production Depreciation
2019 10734
2020 9000 9000*(X-7000)/60000
Cost of Equipment X
Less: Depreciation of 2019 10734
Less: Depreciation of 2020 9000*(X-7000)/60000
Book Value 57466
X-10734-(9000*(X-7000)/60000)=57466
X-10734-(9000X-63000000)/60000)=57466
X-(0.15X-1050)=57466+10734
0.85X+1050=68200
0.85X=67150
X=79000
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