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A trading company on April 30, paid BD 750,000 for a machine which can produce 1,400,000 units in 10 years life. The machine have a salvage value of BD 50,000 and produce 25,000 units in first year, 45,000 units in second year and 70,000 units in third year. Compute depreciation expense for the Second year assuming the company uses the unit production method. O A. 22500 O B. 35000 O C. 12500 O D. 15000

Sagot :

Parrain

Answer: A. BD 22,500

Explanation:

First find the depreciation per unit:

= (Cost of machine -Salvage value) / Total units to be produced over lifetime

= (750,000 - 50,000) / 1,400,000

= BD 0.5 per unit

There are 45,000 units to be produced in the second year:

= 45,000 * 0.5

= BD 22,500

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