Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.Determine the machines' second year depreciation under the units-of-production method.

Question

Quizplus · Accepted Answer

Depreciation Expense = [(Cost - Salvage Value)/ Estimated Useful Life (in units)] *
Production of Units
Depreciation Expense = [($87,000 - $7,000)/400,000] * 84,500 = $16,900

Salta Company Installs a Manufacturing Machine in Its Factory at the Beginning