Hi there,

I'm having a hard time with the unit depreciation calculation here... specifically where they got the 22,500 in the revised cost section.

The question was: Benson Inc. was preparing the annual financial statements and, as part of the year-end procedures, assessed the assets and prepared the following alphabetized schedule based on adjusted values at December 31, 2015: Date of Deprec. Residual Accum. Recoverable Asset Purchase Method* Cost Value Useful Life Deprec. Amount Equipment Oct. 1/10 Units $52,000 $3,000 7,000 units $17,500 $12,000 Furniture Oct. 27/10 DDB 13,000 4,000 10 yrs 8,882 8,000 Land Jan. 2/10 N/A 90,000 N/A N/A N/A 110,000 Office building Feb. 3/10 SL 103,400 17,000 16 yrs 31,950 73,000 Warehouse Apr. 1/10 SL 162,200 11,000 21 yrs 41,400 122,000 "DDB = Double-declining balance; SL = Straight-line; Units = Units-of-production; N/A = Not applicable Your solution was: a) Record any impairment losses at December 31, 2015. Assume Benson Inc. has recorded no impairment losses in previous years. General Journal Page GJ1 Effect On Date Account/Explanation F |Debit Credit Balance Sheet 31/Dec Impairment Loss 3,400 -Equity Office Building 3,400 -Assets Marking: 'Impairment Loss' should be debited for the amount of $22,500, but you have not done this. This will cost you 1 mark. You have not included the 'Equipment' account in this journal entry. This will cost you 2 marks. 'Office Building' should not have been included in this journal entry. Any amounts and balance sheet effect entered for this account will not be evaluated. You have not entered a description for this transaction. However you will not lose any marks for this. $52,000 - $17,500 - $12,000 = $22,500Journal Entry 4 : 'To record revised depreciation on equipment' 'Depreciation Expense, Equipment' should be debited for the amount of $4,000, but you have not done this. This will cost you 1 mark. 'Aocumulated Depreciation. Equipment' should be credited for the amount of $4,000. but you have not done this. This will cost you 1 mark. You have not entered a description for this transaction. However you will not lose any marks for this. Depreciation per unit = $52,000 - $3300 7,000 units . _ $17,500 _ . Units produced $7 per unit 2,500 units Remaining units = 7.000 - 2,500 = 4,500 = 5? per unit Revised cost = $52,000 - $22,500 = $29,500 Revised book value = $29,500 - $17,500 = $12,000 . . . . _ $12,000 - $3.000 _ . Revlsed deprecratlon per unlt 4'500 units $2 per unit Revised depreciation = $2 per unit x 2,000 = $4,000