Refer to the data in PE 9-14. Using the units-of-production method of depreciation, compute depreciation expense and

Question:

Refer to the data in PE 9-14. Using the units-of-production method of depreciation, compute depreciation expense and make the necessary journal entry to record depreciation expense for the first year.

Data from PE 9-14

Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years
Salvage value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Estimated useful life (units). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600,000
Units produced during the fi rst year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000

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...