A machine with a cost of $480,000 has an estimated salvage value of $30,000 and an estimated useful life of five 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?

Question

Quizplus · Accepted Answer

The units-of-activity method calculates depreciation based on usage. The depreciation per hour is ($480,000 - $30,000) / 15,000 hours = $30/hour. For 5,000 hours, the depreciation is 5,000 hours * $30/hour = $150,000.

A Machine with a Cost of $480,000 Has an Estimated