In constructing a common-size income statement, depreciation will be______. A. omitted since it is a noncash expense. B. express
1 answer:
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Answer:
C. $162,000
Explanation:
As for the provided information,
The cost of machine = $500,000
Residual value = $14,000
Therefore amount to be depreciated in useful life = $500,000 - $14,000 = $486,000
Using units of production method we have:
Total expected hours of production = 18,000
Therefore, depreciation per hour = $486,000/18,000 = $27 per hour
Total use in current year = 6,000 hours
Therefore, depreciation in current year = $27 6,000 = $162,000