Question

Depreciation by Units-of-activity Method A diesel-powered tractor with a cost of $156,320 and estimated residual value of $3,600 is expected to have a useful operating life of 92,000 hours. During April, the tractor was operated 300 hours. Determine the depreciation for the month. If required, carry out any division to two decimal places.
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Answer #1

Depreciation rate per unit = (cost - residual value) / estimated useful operating hours = (156320-3600)/92000 = $1.66

Depreciation for the month = no. of hours tractor operated * depreciation rate per unit = 300 hours * $1.66 = $498

Therefore,

Depreciation = $498

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