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Vlada [557]
3 years ago
11

Concord Company purchased a new machine on October 1, 2020, at a cost of $115,900. The company estimated that the machine will h

ave a salvage value of $13,900. The machine is expected to be used for 10,000 working hours during its 5-year life.Compute the depreciation expense under units-of-activity for 2020, assuming machine usage was 1,910 hours.
Business
1 answer:
Kazeer [188]3 years ago
7 0

Answer:

$4,870.5

Explanation:

Annual Depreciation Expense:

= [(Cost - Salvage Value) × Machine Usage in 2020] ÷ Total Estimated Working Hours

Depreciation Expense for 2020 (for 3 months only - October to December):

= [($115,900 - $13,900) × 1,910] ÷ (10,000) × (3/12)

= ($102,000 × 1,910) ÷ (10,000) × (1/4)

= $19,482 × (1/4)

= $4,870.5

Notes:

Depreciation will be calculated for only 3 months since the asset has been acquired on 1st October 2020.

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