On 1 January 2013, Zane Manufacturing Company purchased a machine for $40 000. The company expects to use the machine a total of 24 000 hours over the next 6 years. The estimated sales price of the machine at the end of 6 years is $4 000. The company used the machine 8 000 hours in 2013 and 12 000 in 2014. What is the carrying amount of the machine at the end of 2014 if the company uses units- of- production depreciation?

Question

Quizplus · Accepted Answer

The carrying amount is calculated by subtracting accumulated depreciation from the initial cost. Depreciation per hour is ($40,000 - $4,000) / 24,000 hours = $1.50/hour. For 2013 and 2014, total hours used are 20,000. Depreciation is 20,000 hours * $1.50 = $30,000. Carrying amount = $40,000 - $30,000 = $10,000.

On 1 January 2013, Zane Manufacturing Company Purchased a Machine