A company purchased a weaving machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life.In the first year,15,000 bolts were produced.In the second year,production increased to 19,000 units.Using the units-of-production method,what is the book value of the machine at the end of the second year?
A)$108,400.
B)$144,400.
C)$81,600.
D)$190,000.
E)$180,000.

Question

Quizplus · Accepted Answer

Depreciation expense for the first year = (190,000 - 10,000) / 75,000 * 15,000 = $24,000Depreciation expense for the second year = (190,000 - 10,000) / 75,000 * 19,000 = $46,400Book value at the end of the second year = 190,000 - 24,000 - 46,400 = $120,000

A Company Purchased a Weaving Machine for $190,000