Molly's Manufacturing purchased a machine for $80 000 on 1 January 2018. The machine is expected to have a useful life of 5 years, no residual value, and to produce a total of 50 000 units before it is scrapped. Assuming Molly's Manufacturing uses the units-of-production method and actual production during the machine's first year of use is 12 000 units, the depreciation expense for 2018 is:

Question

Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on the actual usage or production of the asset. The formula is: (Cost - Residual Value) / Total Expected Production * Actual Production. Here, it's ($80,000 - $0) / 50,000 units * 12,000 units = $19,200.

Molly's Manufacturing Purchased a Machine for $80 000 on 1