A machine with a cost of $480000 has an estimated salvage value of $30000 and an estimated useful life of 5 years or 15000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year during which the machine was used 5000 hours?
A) $150000
B) $90000
C) $130000
D) $160000

Question

Quizplus · Accepted Answer

The depreciation per hour = (Cost - Salvage value) / Total estimated hours = ($480,000 - $30,000) / 15,000 hours = $30 per hour. For 5000 hours in the second year, the depreciation = 5000 hours * $30/hour = $150,000.

A Machine with a Cost of $480000 Has an Estimated