Question
At the beginning of the year, Young Company bought machinery, shelving, and a forklift. The machinery initially cost $25,600 but had to be overhauled (at
At the beginning of the year, Young Company bought machinery, shelving, and a forklift. The machinery initially cost $25,600 but had to be overhauled (at a cost of $1,200) before it could be installed (at a cost of $600) 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 $350 in each year.
The shelving cost $9,300 and was expected to last 5 years, with a residual value of $600. The forklift cost $10,800 and was expected to last six years, with a residual value of $2,000.
Compute year 2 units-of-production depreciation expense for the machinery.
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