Question

On January 1, 2015, Truesdale, Inc., purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine was expected to produce a total of 60,000 units in during its life. The machine actually produced 16,000 units during 2015, 23,000 units during 2016, and 21,000 units during 2017. The machinery has a salvage value of $3,000. Using the units-of-production method, the amount of depreciation that should be recorded during 2015 is approximately

Answer 1

Answer:

$8,000

Explanation:

The computation of the depreciation per units or bolts under the units-of-production method is shown below:

= (Original cost - residual value) ÷ (estimated production units)

= ($33,000 - $3,000) ÷ (60,000 units)

= ($30,000) ÷ (60,000 units)

= $0.5 per unit

Now for the 2015 year, it would be

= Production units in second year × depreciation per bolts

= 16,000 units × 0.5

= $8,000