Sabel Co. purchased assembly equipment for $364,000 on January 1, Year 1.

 The equipment is expected to have a useful life of 280,000 miles and a salvage value of $28,000. Actual mileage was as follows:

  Year 1  74,000

Year 2   79,000

Year 3   66,000

Year 4   44,000

Year 5   18,000

 Required

1. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation.
2. Assume that Sabel earns $238,000 of cash revenue during Year 1. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in the following financial statements model.
3. Assume that Sabel sold the equipment at the end of the fifth year for $29,400. Calculate the amount of gain or loss on the sale.

Answer rating: 100% (QA)

Unitsofproduction depreciation is calculated by dividing the actual usage miles during the year by t... View the full answer