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On January 1, 2012, Baker Corp purchased equipment for $55,000. It was expected to last 8 years, after which it will be sold for $3,000. It is expected to be used for a total of 8,000 machine hours, and was used for 900 hours in 2012.
-The depreciation expense for 2012 using the units-of-production method will be
A)$5,850.
B)$6,188.
C)$6,500.
D)$13,750.

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Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on actual usage. The formula is: (Cost - Salvage Value) / Total Estimated Usage * Actual Usage. Here, ($55,000 - $3,000) / 8,000 hours * 900 hours = $5,850.

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