Question

On January 1, 2017, Zade Manufacturing Corporation purchased a machine for $40,100,000. Zade's management expects to...

On January 1, 2017, Zade Manufacturing Corporation purchased a machine for $40,100,000. Zade's management expects to use the machine for 29,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $44,000. The machine was used for 3,700 hours in 2017 and 5,300 hours in 2018. What is the depreciation expense for 2017 if the corporation uses the units-of-production method of depreciation?

Homework Answers

Answer #1

Depreciation rate per hour : [cost -residual value ]/estimated useful life in hours

                       =[40,100,000 - 44,000]/ 29000

                      = 40,056,000/29000

                       = $ 1381.2414 per hour

depreciation expense for 2017 = 3700 * 1381.2414 = $ 5,110,593.18

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