On January 1, 2019, Williams Company purchased a bottle-capping machine for $80,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine's expected salvage value is $5,000. During 2019, the machine capped 250,000 bottles and during 2020, the machine capped 300,000 bottles.
Assuming units-of-production depreciation, 2020 depreciation expense is:

Question

Quizplus · Accepted Answer

The units-of-production depreciation expense for 2020 is calculated as follows: Depreciation per unit = (Cost - Salvage value) / Total units = ($80,000 - $5,000) / 1,500,000 = $0.05 per bottle. For 2020, depreciation expense = 300,000 bottles * $0.05 = $15,000.

On January 1, 2019, Williams Company Purchased a Bottle-Capping Machine