A New Machine Is Expected to Produce 40,000 Units of Product

question 202

Essay

A new machine is expected to produce 40,000 units of product during its 5-year life.The machine cost $180,000 and is estimated to have a $20,000 residual value.If depreciation on the machine is calculated by the double-declining-balance method,what is the depreciation for the first year?

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Definitions:

Pollution Tax

A financial charge imposed on the emission of pollutants, intended to motivate reductions in harmful environmental discharges.

Unit of Production

A single complete item or a specified amount of a commodity produced.

Positive Externality

An economic situation where a third party benefits from a transaction or activity they are not directly involved in.

Negative Externality

A cost suffered by a third party due to an economic transaction or activity, without compensation, such as pollution from a factory affecting nearby residents.