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Herasa Manufacturing purchased a new machine on Jan 1, 20X1 that was built to perform one...

Herasa Manufacturing purchased a new machine on Jan 1, 20X1 that was built to perform one function on its assembly line. Data pertaining to this new machine are: Cost $580,000 Residual value (salvage) $13,000 Estimated service life 5 years Production output 100,000 units Using units of production method, what is the depreciation expense in Year 20X1 if they produced 30,000 units?

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Answer #1

Depreciation = (Cost - Residual)/Production output during life * Units produced during year

= ($580000 - $13000)/100000 units * 30000 units = $170100

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