A company paid $500,000 to purchase equipment and $15,000 to have the equipment delivered to and installed in the company's production facilities.Commercial use of the equipment began on May 1,2019.The estimated residual value of the equipment is $5,000.The equipment is expected to be used a total of 28,000 hours throughout its estimated useful life of six years.The company has an October 31,year-end and had used the equipment a total of 11,200 hours prior to the year-end.Using the units-of-production method,what amount of depreciation expense (to the nearest thousand)would the company report for this equipment in the income statement prepared for the year ended October 31,2019?

Question

Quizplus · Accepted Answer

(Cost - residual value)* (actual production this period/estimated total production)
($15,000 - $5000)* ($11,200/$28,000)= $204,000.

A Company Paid $500,000 to Purchase Equipment and $15,000 to Have