A machines costing $10,000 is estimated to have a useful lifetime of n years and a scrap value of $500.It is expected to run for 25,000 hours over n years.The actual hours the machine runs are: 2000 hours in year 1,1500 hours in year 2 and 800 in year 3.What is the book value of the machine at the end of 3-years?

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The book value of the machine at the end of 3 years can be calculated using the units-of-production method of depreciation. First, calculate the depreciation per hour: (Cost - Scrap value) / Total expected hours = ($10,000 - $500) / 25,000 hours = $0.38 per hour. Then, calculate the total depreciation for 3 years: 2000 hours + 1500 hours + 800 hours = 4300 hours; 4300 hours * $0.38 per hour = $1634. Subtract this from the original cost to get the book value: $10,000 - $1634 = $8366.

A Machines Costing $10,000 Is Estimated to Have a Useful