A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours.It is to be depreciated by the units-of-output method.What is the amount of depreciation for the second full year,during which the machine was used 5,000 hours?
A)$5,000
B)$21,000
C)$35,000
D)$45,000

Question

Quizplus · Accepted Answer

The units-of-output method calculates depreciation based on usage. The total depreciable amount is $120,000 - $15,000 = $105,000. The depreciation per hour is $105,000 / 15,000 hours = $7 per hour. For 5,000 hours, the depreciation is 5,000 hours * $7/hour = $35,000.

A Machine with a Cost of $120,000 Has an Estimated