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Firdavs [7]
3 years ago
9

Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five years and a residual value of $1,0

00. It is estimated to be good for 5,000 hours. Compute the depreciation expense for the first year using the units-of-activity method of depreciation if the generator was used for 1,040 hours.
Business
1 answer:
Nadya [2.5K]3 years ago
3 0

Answer:

$2080

Explanation:

Given: Cost of generator= $11000.

           Residual value= $1000.

            Estimated life of generator= 5000 hours.

            Actual activity performed during the period= 1040 hours.

Now, finding the depreciation expense for the first year using the units-of-activity method.

Formula; Depreciation\ expense= \frac{(cost- residual\ value)}{Total\ estimated\ life\ time\ activity} \times actual\ activity\ performed

⇒ Depreciation expense= \frac{(11000-1000)}{5000} \times 1040

Opening parenthesis

⇒  Depreciation expense= \frac{10000}{5000} \times 1040

⇒  Depreciation expense=  2 \times 1040 = \$ 2080

Hence, the depreciation expense for the first year using the units-of-activity method of depreciation is $2080.

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third

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