On January 1, 2017, Doyle Manufacturing Corporation purchased a machine for $40,000,000
The corporation expects to use the machine for 24,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $40,000. The corporation used the machine for 3,600 hours in 2017 and 5,000 hours in 2018. Calculate depreciation expense for 2018 if the company uses the units-of-production method of depreciation.
What will be an ideal response
Depreciation per unit = (Cost - Residual value) / Useful life in units
Depreciation for the year 2018 = [($40,000,000 - $40,000 ) / 24,000 hours] x 5,000 hours = $8,325,000
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