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On May 1, 2015, Casico Toy Inc. purchased a new piece of equipment that cost $52,000. The estimated useful life is five years and the estimated residual value is $ 4,000. During the five years of useful life the equipment is expected to produce 20,000 units.
Problem 1: Assume that the equipment was purchased on May 1st, 2015. In 2015 the equipment produced 3,500 units. If the company uses the units of output method of depreciation, what is the depreciation expense for the year ended December 31st, 2015?
a. $ 7,200
b. $ 8,400
c. None of the other alternatives are correct
d. $ 6,400
e. $ 9,500
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