Question

A machine with a cost of $77,383.00 has an estimated residual value of $5,123.00 and an estimated life of 5 years or 16,172 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 4,389 hours? Select the correct answer

. $19,611.00 $28,904.00 $21,001.36 $14,452.00 PreviousNext

Answer 1

Correct answer--------------. $19,611.00

Working

Units of Production method
A	Cost	$ 77,383
B	Residual Value	$ 5,123
C=A - B	Depreciable base	$ 72,260
D	Usage in units(in Hours)	16172
E	Depreciation per hour	$ 4.47

.

Depreciation schedule-Units of Activity
Year		Usage	Depreciation expense (4389 x 4.47)
2		4389	$                   19,611