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Assignment ID: FG133136989
Question – On March 1, 2017, Wind Corp purchases equipment for $150,000 in cash. Wind Corp estimates the residual value of the equipment to be $5,000 and the useful life of the equipment to be 10 years. Wind Corp also estimates that the equipment will produce a total of 100,000 units of inventory.
Assume that Wind Corp produces 20,000, 15,000, and 8,000 units during 2017, 2018, and 2019. Wind Corp uses the units-of-production method to calculate depreciation.
On January 1, 2019, Wind Corp reassess how many total units it can produce with the equipment. From January 1, 2019, Wind Corp estimates that the equipment will produce 90,000 units until the end of the useful life. Wind Corp changes no other estimates. Round your answer to the nearest dollar.
(a) How much is the net carrying value of the asset as of Dec 31, 2018?
(b) How much depreciation should Wind Corp take for the year ending December 31, 2019?