A machine with a cost of $160,000 has an estimated salvage value of $10,000 and an estimated useful life of 5 years or 15,000 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 5,000 hours?
A) $50,000
B) $30,000
C) $43,333
D) $53,333

Question

Quizplus · Accepted Answer

The units-of-activity method calculates depreciation based on usage. The depreciation per hour is ($160,000 - $10,000) / 15,000 hours = $10/hour. For 5,000 hours, the depreciation is 5,000 hours * $10/hour = $50,000.

A Machine with a Cost of $160,000 Has an Estimated