Question

A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. it is to be depreciated by the units-of-production method. what is the amount of depreciation for the second full year, during which the machine was used 5,000 hours? $8,000 $12,000 $20,000 $21,667

Answer 1

I believe the depreciation by the units  of actual production would be based on the 5000 hours of use in the second year which would be 5000/15,000 or 0.333 x the original value of the machine of $65,000 or for a result of $21,667 depreciation.