On January 1,2015,Zade Manufacturing Corporation purchased a machine for $40,000,000.The corporation expects to use the machine for 24,000 hours over the next 6 years.The estimated residual value of the machine at the end of the sixth year is $40,000.The corporation used the machine for 3,600 hours in 2015 and 5,000 hours in 2016.What is the depreciation expense for the year 2015 if the corporation uses the units-of-production method of depreciation?

Question

Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on actual usage. The formula is: (Cost - Residual Value) / Total Estimated Hours * Hours Used in Year. For 2015: ($40,000,000 - $40,000) / 24,000 * 3,600 = $5,994,000.

On January 1,2015,Zade Manufacturing Corporation Purchased a Machine for $40,000,000