Cost Salvage Value Useful Life Units of Production MACRS Class Life Asset #1 $ 1,400,000 $ ...

Cost	Salvage Value	Useful Life	Units of Production		MACRS Class Life
Asset #1	$ 1,400,000	$ 100,500	5	2016	41,000	5	* Total units of
				2017	48,000		output =
				2018	26,000		160,000

On january 1st 2016, the company purchased the above asset.

Then, calculate the annual depreciation for 2016, 2017, and 2018

assuming they were all purchased June 1st, 2016.

Show all of your work.

Expert Solution

	CALCULATION OF THE DEPRECIATION AS PER UNIT OF PRODUCTION METHOD

	Purchase Cost =	$ 14,00,000
	Less: Salvage Value =	$ 1,00,500
	Net Value for Depreciation =	$ 12,99,500
	Expected to unit of output=	1,60,000
	Depreciation per Unit =	$ 8.12
	($ 1,299,500 / 160,000 Unit)

	CALCULATION OF THE DEPRECIATION

Years	Units of Activity / Miles	X Depreciation Cost/Unit	Depreciation
2016	41,000	$ 8.12	$ 3,32,997
2017	48,000	$ 8.12	$ 3,89,850
2018	26,000	$ 8.12	$ 2,11,169



	Answer =	Amount
	Annual Depreciation for the year
	2016	3,32,997
	2017	3,89,850
	2018	2,11,169

ekkarill92 answered 3 years ago

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