Calculate depreciation using the units of production method Bayshore Clinic purc

Question

Calculate depreciation using the units of production method Bayshore Clinic purchased a new MRI machine at a cost of $400,000. They figured it would last 5 years or 200,000 scans and would be worth $50,000 at the end of the 5 years. The MRI machine will take 45,000 scans the first year, 40,000 scans in the second year, 35,000 scans in the third year, 40,000 scans in the fourth year and 40,000 scans in the last year. Calculate the Units of Production depreciation for Bayshore Clinic's new MRI machine for the second year.

$70,000

$75,000

$80,000

$400,000

Explanation / Answer

Depreciation rate = (400000-50000/200000) = 1.75 per scan

Depreciation for second year = (40000*1.75) = 70000

so answer is a) $70000

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