Question

Equipment with a cost of $400,000 has an estimated salvage value of $25,000 and an estimated life of 4 years or 15,000 hours. It is to be depreciated using the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

		$100,000
		$113,800
		$82,500
		$93,750

Answer 1

C. $82,500

Depreciation per machine hour = ($400,000 - $25,000) / 15,000 = $25

Amount of depreciation for the first full year = $3,300 × $25 = $82,500