Webcke Limited acquired an item of machinery with an expected useful life of 4 years. The expected total production output over this period was: year 1, 30 000 units; year 2, 25 000 units; year 3, 15 000 units; year 4, 10 000 units. The machinery cost $85 000 and the residual value is $15 000. The amount of depreciation expense recorded in the first year is:

Question

Quizplus · Accepted Answer

The depreciation expense is calculated using the units of production method: (Cost - Residual Value) / Total Units of Production * Units Produced in Year 1 = ($85,000 - $15,000) / 80,000 units * 30,000 units = $26,250.

Webcke Limited Acquired an Item of Machinery with an Expected