question archive A factory machine was purchased for $391000 on January 1, 2021
A factory machine was purchased for $391000 on January 1, 2021
Subject:AccountingPrice:2.87 Bought7
A factory machine was purchased for $391000 on January 1, 2021. It was estimated that it would have a $79000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 36000 hours in the 5 years. The company ran the machine for 3600 actual hours in 2021. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2021 would be
$31200.
$62400.
$79000.
$39100.
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Answer:
Depreciation Expense = Cost - salvage value
= $391,000 - $79,000
= $312,000
Depreciation Expense for 2021 = (Actual hours in 2021 / Total hours) * Depreciation
= (3,600 / 36,000) * $312,000
= $31,200
$31,200 is the correct answer.
