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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

Answer :

Answer:

See the answer below.

Step-by-step explanation:

Using the units-of-production method, the formula for depreciation is:

[tex]\mathrm{Depreciation\:=\:\frac{Cost\:-\:Residual\:value}{Total\:Expected\:Units\:\cdot \:\:Units\:produced\:in\:the\:year}}[/tex]

[tex]\mathrm{Depreciation\:=\:\frac{15000-5000}{400\cdot 10000}}\\\\=\$400[/tex]

In this case, the depreciation will be $1 per unit produced throughout the useful life.

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