Answer:
Annual depreciation= $111,870
Explanation:
Giving the following information:
Purchase price= $1,300,000
Salvage value= $57,000
Estimated useful life= 10,000 hours.
Coronado used the asset for 900 hours in the current year.
To calculate the depreciation expense under the activity method, we need to use the following formula:
Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated
Annual depreciation= [(1,300,000 - 57,000)/10,000]*900
Annual depreciation= $111,870
