SportsWorld purchased a machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. SportsWorld estimates that the machine couldproduce 750,000 units of product over its useful life. In the first year, 95,000 units were produced. In the second year, production increased to 111,000 units. Using theunits-of-production method, what is the amount of depreciation that should be recorded for the second year?

Question

Quizplus · Accepted Answer

Depreciation expense = (Cost - Residual value) x (Units produced in the period / Total estimated units of production)= ($190,000 - $10,000) x (111,000 / 750,000)= $180,000 x 0.148= $26,640

SportsWorld Purchased a Machine for $190,000