**Units-of-Production Depreciation Example**On January 1, the Matthews Band purchases sound equipment for $68,200. The band plans to use the equipment for a total of five years, during which it will perform 200 concerts. After the five-year period, it expects to sell the equipment for $2,000. In the first year, the band forecasts it will perform 55 concerts.**Units-of-Production Depreciation Calculation**Compute the first-year depreciation using the units-of-production method.1. **Select Formula for Depreciation Rate of Units of Production:** - This section requires choosing the appropriate formula to determine the depreciation per unit of production (per concert).2. **Calculate the First-Year Depreciation Expense:** - **Depreciation per concert:** [Enter the formula to determine the cost allocated per concert] - **Concerts in first year:** 55 concerts - **Depreciation in first year:** [Calculate based on the depreciation per concert multiplied by the number of concerts in the first year]*Note: These fields are designed to guide users through the calculation process, encouraging practical application of the units-of-production method.*

Answer: Depreciation Rate for Units Production formula (Cost-Salvage Value / Total Units Production)…

[The following information applies to the questions displayed below.] On January 1, the Matthews Band pays $68,200 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. QS 8-5 (Algo) Units-of-production depreciation LO P1 Compute the first-year depreciation using the units-of-production method.

[The following information applies to the questions displayed below.] On January 1, the Matthews Band pays $68,200 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. QS 8-5 (Algo) Units-of-production depreciation LO P1 Compute the first-year depreciation using the units-of-production method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [The following information applies to the questions displayed below] On January 1, the Matthews Band pays $69,000 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. Select formula for the depreciation rate of Units of Production: Calculate the first year depreciation expense Depreciation per concert Concerts in first year Depreciation in first year
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