Equipment with a cost of $400,000 has an estimated salvage value of $25,000 and an estimated life of four 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?

Question

Quizplus · Accepted Answer

The units-of-activity method calculates depreciation based on usage. First, find the depreciation per hour: ($400,000 - $25,000) / 15,000 hours = $25/hour. Then, multiply by the hours used: 3,300 hours * $25/hour = $82,500.

Equipment with a Cost of $400,000 Has an Estimated Salvage