On January 1,2017,Zade Manufacturing Corporation purchased a machine for $40,900,000.Zade's management expects to use the machine for 27,000 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 3,900 hours in 2017 and 5,400 hours in 2018.What is the depreciation expense for 2017 if the corporation 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

A)Depreciation per unit = (Cost - Residual value)/ Useful life in units
Depreciation per unit = ($40,900,000 - $47,000)/ $27,000 = $1,513.07
Depreciation for the year 2017 = $1,513.07 × 3,900 hours = $5,900,973

On January 1,2017,Zade Manufacturing Corporation Purchased a Machine for $40,900,000