Question
At the beginning of the year, Seraglio Companies bought machinery, shelving, and a forklift. The machinery initially cost $32,800 but had to be overhauled (at
At the beginning of the year, Seraglio Companies bought machinery, shelving, and a forklift. The machinery initially cost $32,800 but had to be overhauled (at a cost of $2,640) before it could be installed (at a cost of $1,320) and finally put into use. The machinerys total life was estimated as 40,000 hours, with an estimated residual value of $1,000. The machinery was actually used 5,000 hours in year 1 and 7,000 hours in year 2. Repair costs were $530 in each year.
The shelving cost $10,200 and was expected to last 5 years, with a residual value of $780. The forklift cost $18,900 and was expected to last six years, with a residual value of $2,360.
2. Compute year 2 units-of-production depreciation expense for the machinery. (Do not round intermediate calculations.)
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