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QS 8-4 Units-of-production depreciation LO P1 On January 1, the Matthews Band pays $68,600 for sound equipment. The band estimates it will use this equipment for five years and perform 200 concerts. It estimates that after five years it can sell the equipment for $2,000. During the first year, the band performs 55 concerts. Compute the first-year depreciation using the units-of-production method.

Respuesta :

Answer:

$18,315

Explanation:

The first-year depreciation using the units-of-production method can be calculated as follows

Depreciation per concert = (Cost of equipment - Salvage value)/Total estimated concerts

Depreciation per concert = (68,600 - 2,000)/200

Depreciation per concert = 66,600/200

Depreciation per concert = $333

Depreciation in first year = 336 x 55

Depreciation in first year = $18,315

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