On January 1,2017,Henry Manufacturing Corporation purchased a machine for $40,600,000.Henry's management expects to use the machine for 34,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $47,000.The machine was used for 4,000 hours in 2017 and 5,400 hours in 2018.Calculate the book value of the machine at the end of 2018 if the company uses the units-of-production method of depreciation.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Question

Quizplus · Accepted Answer

Depreciation per unit = (Cost - Residual value)/ Useful life in units
Depreciation per unit = (40,600,000 - 47,000)/ 34,000 = 1,192.74
Depreciation for the year 2017= 1,192.74 × 4,000 = $4,770,960
Depreciation for the year 2018 = 1,192.74 × 5,400 = $6,440,796
Book value of machine at the end of 2018 = $40,600,000 - $4,770,960 - $6,440,796 = $29,388,244.

On January 1,2017,Henry Manufacturing Corporation Purchased a Machine for $40,600,000