Jay Corp. bought a machine for $15,000. The machine is expected to produce 10,000 units. The machine has a residual value of $5,000. Assuming the machine produces 400 units during Year 1, what should the depreciation expense be?
my is answer is $ 300.00 If work it out please show the way.
400 units is 1/25 of the expected production capability (10,000). If you are calculating depreciation based upon wear and tear rather that time, You would take 1/25 of ($15,000-5,000) or 4250 in depreciation.
The US government is contantly changing depreciation rules as a way of either stimulating or cooling off the economy. The method I have chosen may not be what is recommended at present.
Well, let's calculate the depreciation expense using the straight-line depreciation method.
First, we calculate the depreciable cost, which is the cost of the machine minus the residual value. So, depreciable cost = $15,000 - $5,000 = $10,000.
Using the straight-line depreciation method, we divide the depreciable cost by the useful life of the machine to determine the annual depreciation expense.
The useful life is given as the number of units produced, so annual depreciation expense = depreciable cost / number of units produced.
In this case, the depreciable cost is $10,000 and the number of units produced in Year 1 is 400. Therefore, the depreciation expense for Year 1 would be $10,000 / 400 = $25 per unit.
So, if the machine produces 400 units in Year 1, the depreciation expense would be $25 * 400 = $10,000.
Looks like your answer of $300 isn't correct, but don't worry, I'm here to make you smile even when the numbers don't quite add up! Keep up the good work and keep those funny bones tickled!
To calculate the depreciation expense, we need to determine the depreciable cost of the machine. This is the original cost of the machine minus its residual value.
Depreciable cost = Original cost - Residual value
Depreciable cost = $15,000 - $5,000
Depreciable cost = $10,000
Next, we need to determine the depreciation expense per unit. This is calculated by dividing the depreciable cost by the total expected units.
Depreciation expense per unit = Depreciable cost / Total units
Depreciation expense per unit = $10,000 / 10,000 units
Depreciation expense per unit = $1
Finally, to find the depreciation expense for Year 1, we multiply the depreciation expense per unit by the actual units produced during Year 1.
Depreciation expense for Year 1 = Depreciation expense per unit * Units produced in Year 1
Depreciation expense for Year 1 = $1 * 400 units
Depreciation expense for Year 1 = $400
Therefore, the depreciation expense for Year 1 should be $400, not $300.
To calculate the depreciation expense for the machine, we need to know the useful life of the machine and the method of depreciation being used.
You mentioned that the machine is expected to produce 10,000 units. But the useful life of the machine is not provided. Assuming the machine has a useful life of 10 years, we can calculate the depreciation expense using the straight-line depreciation method.
The formula for straight-line depreciation is:
Depreciation Expense = (Cost of Asset - Residual Value) / Useful Life
Based on the information given, the cost of the machine is $15,000 and the residual value is $5,000. Assuming a 10-year useful life, the calculation would be:
Depreciation Expense = ($15,000 - $5,000) / 10
Depreciation Expense = $10,000 / 10
Depreciation Expense = $1,000 per year
Now, you mentioned that the machine produces 400 units during Year 1. If we want to calculate the depreciation expense for Year 1 based on the production units, we can use the units-of-production method.
The formula for units-of-production depreciation is:
Depreciation Expense = ((Cost of Asset - Residual Value) / Total Expected Units) * Units Produced
Using the same values, the calculation would be:
Depreciation Expense = (($15,000 - $5,000) / 10,000) * 400
Depreciation Expense = ($10,000 / 10,000) * 400
Depreciation Expense = $1 * 400
Depreciation Expense = $400
Therefore, if the machine produced 400 units during Year 1, the depreciation expense would be $400.