Question

On January​ 1, 2018, Tyson Manufacturing Corporation purchased a machine for $ 41 comma 000 comma 000. ​Tyson's management expects to use the machine for 28 comma 000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $ 47 comma 000. The machine was used for 4 comma 600 hours in 2018 and 5 comma 200 hours in 2019. What is the depreciation expense for 2018 if the corporation uses the unitsminusofminusproduction method of​ depreciation? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

Annual depreciation= $6,727,992.86

Step-by-step explanation:

Giving the following information:

Purchase price= $41,000,000

Useful life in hours= 28,000

Residual value= $47,000

2018= the machine was used for 4,600 hours

Using the units of production method of depreciation, the annual expense is calculated using the following formula:

Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated

Annual depreciation= [(41,000,000 - 47,000) / 28,000]*4,600

Annual depreciation= $6,727,992.86