Question

Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five years and a residual value of $1,000. It is estimated that it will be good for 5,000 hours. Compute the depreciation expense for the first year using the units-of-activity method of depreciation assuming the generator was used for 1,040 hours.

Answer 1

Answer:

2080 dollars

Explanation:

Given that Cardinal Industries purchased a generator that cost $11,000

cost of generator = 11000

Estimated life       = 5 years

Residual value     =1000

Hours                    =5000

Depreciation per unit hour = (Cost - residual value)/total lifetime hours

=$\frac{11000-1000}{5000} \\=2$

For first year the generator was used for 1,040 hours.

Hence depreciation to be charged in I year

= $1040(2)\\=2080$

answer is 2080 dollars.