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5 March, 09:50

A factory machine was purchased for $216000 on January 1, 2022. It was estimated that it would have a $40000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 55000 hours in the 5 years. If the actual number of machine hours ran in 2022 was 5500 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2022 would be a. $21600. b. $17600. c. $35200. d. $43200.

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  1. 5 March, 10:11
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    b. $17600

    Explanation:

    The computation of the amount of depreciation expense for the year 2022 is shown below:

    But before that first we have to find out the per hour rate which is

    Units-of-production method:

    = (Original cost - residual value) : (estimated production)

    = ($216,000 - $40,000) : (55,000 hours)

    = ($176,000) : (55,000 hours)

    = $3.2 per hour

    Now for the 2022 year, it would be

    = Machine runs in 2022 year * depreciation per hour

    = 5,500 hours * $3.2

    = $17,600
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Home » Business » A factory machine was purchased for $216000 on January 1, 2022. It was estimated that it would have a $40000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 55000 hours in the 5 years.
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