Equipment with a cost of $153,834 has an estimated residual value of $7574 and a
ID: 2579782 • Letter: E
Question
Equipment with a cost of $153,834 has an estimated residual value of $7574 and an estimated life of 6 years per 13,123 hours. It is depreciated by the straight-line method. What is the amount of depreciation of the first full year, during which the equipment was used for 3,248 hours? Equipment with a cost of $153,834 has an estimated residual value of $7574 and an estimated life of 6 years per 13,123 hours. It is depreciated by the straight-line method. What is the amount of depreciation of the first full year, during which the equipment was used for 3,248 hours?Explanation / Answer
Total Expected Hours = Annual Hours x Life of the Asset
= 13123 x 6
= 78738 Hours
Year 1 Depreciation = (Cost - Residual Value) x Hours worked in Year 1 / Total Expected Hours
= (153834 - 7574) x 3248 / 78738
= $6033.33
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