Using the units of production method

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Reference no: EM131208499

Steele Inc. purchased a machine for $500,000 on January 1, Year1. The machine has a $20,000 residual value and an estimated life of 20 years. The machine is expected to produce 1,000,000 widgets over its life. Steele prepares annual financial statements at 12/31 each year.

The machine produced 80,000 widgets in Year1, and 130,000 widgets in Year2. What is depreciation expense for Year1 using the units-of- production method?

a. $38,400 b. $80,000 c. $28,800 d. $40,000 e. None of the above

Reference no: EM131208499

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