Question

Marshall Company purchases a machine for $840,000. The machine has an estimated residual value of $40,000....

Marshall Company purchases a machine for $840,000. The machine has an estimated residual value of $40,000. The company expects the machine to produce four million units. The machine is used to make 680,000 units during the current period.

If the units-of-production method is used, the depreciation expense for this period is:

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Answer #1

Depreciation per unit = (Cost - Salvage value) /Life in units

= (840,000-40,000)/4,000,000

= 0.20 per unit

Depreciation for the period = 0.20 * 680,000

= 136,000

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