Question

Norwood, Inc. Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of eight years, or 12,500 hours of operation. The crane was purchased on January 1, 2017, and was used 2,700 hours in 2017 and 2,600 hours in 2018. Refer to the information for Norwood, Inc. If Norwood uses the units-of-production method, what is the depreciation rate per hour for the equipment

Answer 1

Answer:

$6

Explanation:

depreciation rate per hour using the units-of-production method = (cost of asset - residual value) / estimated hours of operation

($80,000 - $5,000) / 12,500 = $6