Answer:
Option B Depreciation Expense $8,400, net book value $31,600
Explanation:
The depreciation can be calculated using the following formula:
Depreciation For Y1 = (Cost - Residual Value)* Hours consumed / T. Hours
Here
Cost is $40,000
Residual Value is $5,000
Hours consumed are 1,200 hours
Total Hours are 5,000 hours
Now by putting values, we have:
Depreciation For Y1 = ($40,000 - $5,000) * 1200 / 5000
Depreciation For Y1 = $8,400
Now Net Book Value can be calculated using the following formula:
Net Book Value = Cost - Accumulated Depreciation
Net Book Value = $40,000 - $8400 = $31,600
Hence the right answer is option B.
