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A factory machine was purchased for $385000 on January 1, 2021. It was estimated that it would have a $78000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 38000 hours in the 5 years. The company ran the machine for 3800 actual hours in 2021. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2021 would be

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abiolataiwo2015

Answer:

$30,700

Explanation:

Calculation for what the amount of depreciation expense for 2021 would be

Depreciation expense for 2021 =[($385,000 - $78,000) ÷ 38,000] × 3,800

Depreciation expense for 2021 =($307,000÷38,000)×3,800

Depreciation expense for 2021 =8.078947369×3,800

Depreciation expense for 2021 =$30,700

Therefore the amount of depreciation expense for 2021 would be $30,700