Chapter 8 - Units of Production Method of Depreciation Example

The video tutorial explains the units of production method for calculating depreciation. It covers the steps to determine the depreciation rate per unit and applies this rate to calculate yearly depreciation expenses. The tutorial emphasizes the importance of not exceeding the depreciable base and provides a detailed walkthrough of journal entries for each year. The session concludes with a brief mention of the declining balance method as the next topic.

What is the expected number of copies Papa Company plans to produce in the first five years?

• 700,000

• 600,000

• 500,000

• 400,000

Which formula is used to calculate the depreciation rate per unit?

• Tack value divided by salvage value

• Total units produced divided by tack value

• Salvage value divided by total expected units

• Tack minus salvage value divided by total expected units

How many copies were actually produced in year 1?

• 115,000

• 125,000

• 80,000

• 100,000

What is the depreciation expense for year 2?

• 2400

• 2760

• 1920

• 3000

In year 3, what is the accumulated depreciation after adding the year's expense?

• 10080

• 7320

• 12240

• 4920

What adjustment is made in year 5 to ensure the depreciable base is not exceeded?

• Increase depreciation expense

• Decrease accumulated depreciation

• Decrease depreciation expense

• Increase accumulated depreciation

What is the maximum depreciable base for the copier?

• 16,000

• 14,000

• 12,000

• 10,000