Question

Pacific Manufacturing company installs a new manufacrutrin machine that operates on wireless transmission from its operator in another party of the company. the machine was purchased and operational on January 2, 2019 at a cost of 150,000. the machine's estimated useful life is 8 years, or 500,000 units of production with a salvage value of 10,000$

during the third year of operation the machine produced 40,000 units.

1) what is the describtion expense for the third year using the straight line method of depreciation?

2)what is the depreciation expense for the third year the units of production method of depreciation?

3)record the depretiation expense based on the straight line method of depreciation calculated in 1#above.

Answer 1

Answer-1)- The depreciation expense for the third year using the straight line method of depreciation is = $17500.

Explanation- Straight line Method-Annual Depreciation-

= Cost of asset- Salvage value of asset/No. of useful life (years)

=($150000-$10000)/8 years

=$140000/ 8 years

= $17500         

Third year depreciation expense= $17500

2)-The depreciation expense for the third year the units of production method of depreciation is= $11200.

Explanation- Units of production method:-Annual depreciation expense per unit-

=Cost – salvage /Total units produced

=($150000-$10000)/500000 units

= $0.28 per unit

Depreciation expense for third year= Depreciation expense per units*Units produced

=$0.28 per unit*40000 units

= $11200

3)- Journal entry for third year depreciation expense-

DATE	ACCOUNTS TITLES & EXPLANATION	DEBIT	CREDIT
		$	$
Third Year	Depreciation expense	17500
	Accumulated depreciation		17500
	(Being entry recorded for depreciation expense