A company purchased a weaving machine for dollar 214,810. The machine has a usef

Question

A company purchased a weaving machine for dollar 214,810. The machine has a useful life of 8 years and a residual value of dollar 11,500. It is estimated that the machine could produce 753,000 bolts of woven fabric over its useful life. In the first year, 106,500 bolts were produced. In the second year, production increased to 110,500 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year? dollar 30,381. dollar 58,590. dollar 31,523. dollar 28,755. dollar 29,835.

Explanation / Answer

Particulars Amount (in $) Cost of Weaving Machine 214810.00 Less: Residual Value 11500.00 Machine's depreciable cost 203310.00 Production of bolts of woven fabric 753000.00 Depreciation per unit 0.27 Particulars Production per year Depreciation per unit Depreciation Accumulated Depreciation 1st year 106500.00 0.27 28755.00 28755.00 2nd year 110500.00 0.27 29835.00 58590.00 Answer. Option E. Amount of depreciation expense to be recorded for the second year is Rs.29,835.00

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