The Novice Corporation purchased a machine for $80 000 on 1 January 2018. The machine is expected to have a useful life of 5 years, a residual value of zero, and a production capacity of 120 000 units before it is scrapped. The Novice Corporation uses the units-of-production method to calculate depreciation. For the year ending 31 December 2018, the depreciation was $16 000. The number of units produced during 2019 is 30 000. The carrying amount of the machine at 31 December 2019 is:

Question

Quizplus · Accepted Answer

To calculate the carrying amount of the machine at 31 December 2019, we need to calculate the total depreciation for the machine until that date.

Total units of production = 120,000

Total depreciation = (cost - residual value)/total units of production * number of units produced

= ($80,000 - $0)/120,000 * 30,000

= $20,000

Therefore, the carrying amount of the machine at 31 December 2019 is:

Carrying amount = Cost - Total depreciation

= $80,000 - $16,000 - $20,000

= $44,000

So the correct choice is D, $44,000.

The Novice Corporation Purchased a Machine for $80 000 on 1