A company purchased a rope braiding machine for $181,000 The machine has a usefu

Question

A company purchased a rope braiding machine for $181,000 The machine has a useful life of 9 years and a residual value of $12.500 if is estimated that the machine could produce 770.000 units of climbing rope over its useful life. In the first year, 103.000 units were produced. In the second increased to 108.000 units. Using the units of production method, what in the amount of depreciation that should be recorded for the second year? Do not round the depreciation per unit. Round your final answer in a whole dollar amount.

Explanation / Answer

Depreciation in Year 2 = $ 23634,

working given below :-

Depreciation Per unit = (181000-12500)/770000 i.e Depreciation per unit = 0.2188 per unit Production in Year 2 = 108000 units Depreciation in year 2 = 108000 X 0.2188 = 23633.77 or $ 23634

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