Question

On January​ 2, 2019, Konrad Corporation acquired equipment for $ 800,000. The estimated life of the equipment is 5 years or 31,000 hours. The estimated residual value is $ 25,000. If Konrad Corporation uses the units of production method of​ depreciation, what will be the debit to Depreciation Expense for the year ended December​ 31, 2020, assuming that during this​ period, the asset was used 10,000 ​hours?

Answer 1

Answer: $250,000

Explanation:

Depreciation expense using the unit of production method:

[(Actual cost - Salvage value) / total estimated productive capacity] × actual productive capacity

$800,000 - $25000 / 31,000 = 25

25 × 10,000 = $250,000