Equipment with a cost of $640,000 has an estimated salvage value of $40,000 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 for 3,300 hours?
A)$160,000.
B)$180,800.
C)$132,000.
D)$150,000.

Question

Quizplus · Accepted Answer

The units-of-activity method calculates depreciation based on usage. The depreciation per hour is ($640,000 - $40,000) / 15,000 hours = $40/hour. For 3,300 hours, the depreciation is 3,300 hours * $40/hour = $132,000.

Equipment with a Cost of $640,000 Has an Estimated Salvage