If the units-of-production method is used, the depreciation expense for this period is: <u>$136,000</u>
<u>Explanation</u>:
<em><u>Given</u></em>:
Cost of machine= $840,000
Estimated residual value= $40,000
No of units produced during current period= 680,000 units
Expected production by the machine= 4 million units
Unit of production method= cost of asset-salvage value/useful life in the form of units produced
Depreciation per unit= (cost - residual value)/estimated life in units
= (840,000-40,000)/4,000,000
Depreciation per unit= 0.2 per unit
To calculate depreciation for period,
Depreciation for period= depreciation per unit*actual units produced in this period
= .2*680,000
Depreciation for period= $136,000
