Asked by Micah Jahnke on Mar 10, 2024

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A machine with a cost of $480000 has an estimated salvage value of $30000 and an estimated useful life of 5 years or 15000 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 5000 hours?

A) $150000
B) $90000
C) $130000
D) $160000

Units-Of-Activity

A method of depreciation that allocates the cost of an asset over its useful life based on its activity level, such as miles driven or hours used.

Salvage Value

The estimated resale value of an asset at the end of its useful life; it is used in calculating depreciation expense.

Depreciation

The orderly apportionment of a physical asset's cost throughout its useful life.

  • Compute the expenses of depreciation utilizing a variety of methods, such as straight-line, double-declining balance, and units-of-activity.
  • Recognize the differences among various approaches to depreciation and where they are aptly applied.
  • Engage scholarly knowledge to evaluate the depreciated book value of assets post a designated period.
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JH
Joanna HernandezMar 10, 2024
Final Answer :
A
Explanation :
The depreciation per hour = (Cost - Salvage value) / Total estimated hours = ($480,000 - $30,000) / 15,000 hours = $30 per hour. For 5000 hours in the second year, the depreciation = 5000 hours * $30/hour = $150,000.