On January 10, 2016, Dallas Company purchased a machine to mold components for one of its products.

Question:

On January 10, 2016, Dallas Company purchased a machine to mold components for one of its products. Total cost of the machine was $860,000. It is expected to produce 900,000 units and to have a salvage value of $50,000. The company used the units-of-production method of depreciation.

a. In 2016, it produced 90,000 units. Compute the depreciation expense for 2016.

b. During 2017, 120,000 units were produced. Compute the depreciation expense for 2017.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...