On January 1, 2011, Input Outzone Inc, acquired a new

On January 1, 2011, Input Outzone Inc, acquired a new machine from Acme Equipment Company that had a selling price (including sales tax) of $86,016. Acme charged $1,920 to deliver the equipment and $7,680 to install it at Input Outzone site. Input Outzone had also made arrangements for Acme to modify and test the machine to Input Outzone’s specifications after installation. Acme provided this service at an additional cost of $288. Input Outzone also had Acme apply their corporate logo to the machine for an additional cost of $125. Input Outzone Manufacturing is a fairly young company and made special payment arrangements with Acme. Acme agreed to accept a piece of land owned by Input Outzone with a fair market value of $31,250 as partial payment for the machine. Input Outzone paid the remainder in cash.

GENERAL JOURNAL

page

DATE DESCRIPTION DOC.
NO.
POST.
REF.
DEBIT CREDIT
1

Jan. 01

1
2

2
3

3

APPLY THE CONCEPTS: Calculate and determine the entry for units-of-production depreciation

The machine purchased by Input Outzone Manufacturing (see the journal entry above) is expected to produce 295,000 units. At the end of its useful life, the residual value of the machine is estimated to be $7,000. Input Outzone Manufacturing’s fiscal year ends each December 31. In the table to the below, enter the machine’s depreciation expense, the balance of Accumulated Depreciation, and the book value for each year the machine has been in service, using the units-of-production method. The actual production for the machine is as follows:

2011 2012 2013 2014
Units 57,500 65,000 67,500 105,000

Using the above data, calculate the depreciation cost per unit:

$
Depreciation Cost per Unit = = $

Units-of-Production Method
Year Depreciation Expense Accumulated Depreciation Book Value
2011 $ $ $
2012 $ $ $
2013 $ $ $
2014 $ $ $

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