SportsWorld purchased a machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.SportsWorld estimates that the machine could produce 750,000 units of product over its useful life.In the first year,95,000 units were produced.In the second year,production increased to 111,000 units.Using the units-of-production method,what is the amount of depreciation that should be recorded for the second year?

Question

Quizplus · Accepted Answer

Depreciation for the second year = (Cost of machine - Residual value) x (Units produced in the second year / Total estimated units of production)= ($190,000 - $10,000) x (111,000 / 750,000)= $180,000 x 0.148= $26,640

SportsWorld Purchased a Machine for $190,000