**Text:**Jim Company bought a machine for $37,560 with an estimated life of 5 years. The residual value of the machine is $6,100. This machine is expected to produce 121,000 units. In year 1, it produced 19,500 units, and in year 2, 38,500 units. Assuming the units-of-production method, calculate the first 2 years’ depreciation.**Table:**| | Depreciation ||--------|--------------|| Year 1 | || Year 2 | |**Explanation:**This text is part of an educational exercise on calculating depreciation using the units-of-production method. To find the depreciation for the first two years, you need to:1. Calculate the depreciation cost per unit: - Depreciation Cost per Unit = (Cost - Residual Value) / Total Expected Units - = ($37,560 - $6,100) / 121,000 - = $31,460 / 121,000 - = $0.26 per unit2. Calculate the depreciation for each year: - Year 1 Depreciation = Units Produced in Year 1 × Depreciation Cost per Unit - = 19,500 × $0.26 - = $5,070 - Year 2 Depreciation = Units Produced in Year 2 × Depreciation Cost per Unit - = 38,500 × $0.26 - = $10,010Thus, the table would be filled as follows:| | Depreciation ||--------|--------------|| Year 1 | $5,070 || Year 2 | $10,010 |This provides a hands-on understanding of the units-of-production method, illustrating how depreciation is spread based on actual usage rather than time.

Under units of production depreciation methods, depreciation expense is calculated on the number of…

Answered: Jim Company bought a machine for…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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