Using the data from BE11- 9, compute the depreciation expense for the first two years and determine the net book value at the end of the second year ( assume Hermit Associates uses the units- of- output depreciation method). The machine’s total output is expected to be 100,000 units. Actual output during year one was 12,000 units. Actual output during year two was 8,000 units.
In a BE11- 9 Hermit Associates acquired a machine on January 1 at a cost of $ 250,000. Hermit estimates that the machine has a useful life of 10 years and a $ 50,000 residual value. Compute the depreciation expense for the first two years and determine the net book value at the end of the second year, assuming the straight- line method is used.