Equipment with a cost of $480,000 has an estimated salvage value of $30,000 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?
A) $120,000.
B) $135,600.
C) $99,000.
D) $112,500.

Question

Quizplus · Accepted Answer

The depreciation per hour is calculated as ($480,000 - $30,000) / 15,000 hours = $30/hour. For 3,300 hours, the depreciation is 3,300 hours * $30/hour = $99,000.

Equipment with a Cost of $480,000 Has an Estimated Salvage