Using the following data and the straight-line method of depreciation, compute depreciation expense and make the necessary

Question:

Using the following data and the straight-line method of depreciation, compute depreciation expense and make the necessary journal entry to record depreciation expense for the first year.

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 first 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...