Question
A company paid $600,000 to purchase equipment and $10,000 to have the equipment delivered to and installed in the company's production facilities. Commercial use of
A company paid $600,000 to purchase equipment and $10,000 to have the equipment delivered to and installed in the company's production facilities. Commercial use of the equipment began on May 1, 2014. The estimated residual value of the equipment is $10,000. The equipment is expected to be used a total of 32,000 hours throughout its estimated useful life of 8 years. The company has an October 31, 2014 year-end and had used the equipment a total of 2,000 hours prior to the year-end. Using the units- of- production method, what amount of depreciation expense (to the nearest thousand) would the company report for this equipment in the income statement prepared for the year-ended October 31, 2014?
$18,750 $37,500 $38,125 $31,500
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started