- A factory machine was purchased for $300,000 on January 1, 2020. It was estimated that it would have a $60,000 residual value at the end of its 5- year useful life. It was also estimated that the machine would be run 80,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2020. If the company uses the units-of- activity method of depreciation, the amount of depreciation expense for 2020 would be: O a. $30,000. O b. $15,000 O c. $12,000. O d. $24,000.
- A factory machine was purchased for $300,000 on January 1, 2020. It was estimated that it would have a $60,000 residual value at the end of its 5- year useful life. It was also estimated that the machine would be run 80,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2020. If the company uses the units-of- activity method of depreciation, the amount of depreciation expense for 2020 would be: O a. $30,000. O b. $15,000 O c. $12,000. O d. $24,000.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 3EA: Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is...
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT