Question

Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual...

Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of eight years, or 12,500 hours of operation. The crane was purchased on January 1, 2017, and was used 2,700 hours in 2017 and 2,600 hours in 2018.

Refer to the information for Norwood, Inc.

What amount will Norwood, Inc. report as depreciation expense over the eight-year life of the equipment?

a.$60,000

b.$80,000

c.$75,000

d.$72,000

Business   Accounting   
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Answer #1
Answer
The Correct Option is C: $75,000
Explanation
Units of Production method
A Cost $                          80,000
B Residual Value $                            5,000
C=A - B Depreciable base $                          75,000
(Depreciation Expense over the 8 year Life)
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