A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a salvage 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

The book value of the machine at the end of the second year is $108,400. This is calculated by taking the original cost of the machine ($190,000) and subtracting the accumulated depreciation ($81,600). The accumulated depreciation is calculated by multiplying the annual depreciation expense ($10,000) by the number of years the machine has been in use (2).

A Company Purchased a Weaving Machine for $190,000