A factory machine was purchased for $375,000 on January 1, 2014. It was estimated that it would

Question:

A factory machine was purchased for $375,000 on January 1, 2014. It was estimated that it would have a $75,000 at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2014. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2014 would be
a. $37,500.
b. $60,000.
c. $75,000.
d. $30,000.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...