On June 1, Year 1, a machine costing $45,000 was acquired. The machine is expected to produce 90,000 units over a 5-year period, after which it will be scrapped. The machine produced 20,000 units during Year 1. The company's fiscal year end is December 31. Which statement is true?

Question

Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on actual usage. Depreciation per unit is $45,000 / 90,000 units = $0.50 per unit. For 20,000 units, depreciation is 20,000 * $0.50 = $10,000.

On June 1, Year 1, a Machine Costing $45,000 Was