On January 1,2018,McHenry Manufacturing Company purchased a machine for $40,400,000.McHenry's management expects to use the machine for 34,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $50,000.The machine was used for 4600 hours in 2018 and 6000 hours in 2019.Calculate the book value of the machine at the end of 2019 if the company uses the units-of-production method of depreciation.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

Depreciation per unit = (Cost - Residual value) / Useful life in units
Depreciation per unit = (40,400,000 - 50,000) / 34,000 = 1186.76
Depreciation for the year 2018= 1186.76 × 4600 = $5,459,096
Depreciation for the year 2019 = 1186.76 × 6000 = $7,120,560
Book value of machine at the end of 2019 = $40,400,000 - $5,459,096 - $7,120,560 = $27,820,344.

On January 1,2018,McHenry Manufacturing Company Purchased a Machine for $40,400,000