Answer:
Book value year 3= $27,000
Explanation:
Giving the following information:
A machine that costs $100,000 has an estimated residual value of $10,000 and an estimated useful life of 10,000 machine hours.
Hours:
Year 1= 1,000 hours
Year 2= 2,000 hours
Year 3= 4,000 hours
Using the units of production method, we need to use the following formula on each year:
Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated
Year 1= [(100,000 - 10,000)/10,000]*1,000= 9,000
Year 2= 9*2,000= $18,000
Year 3= 9*4,000= $36,000
Book value year 3= 90,000 - 63,000= $27,000
Answer:
$37,000
Explanation:
Depreciation expense = Depreciation factor x total machine hour per year
Depreciation factor = (Cost of asset - residual value ) / useful life
($100,000 - $10,000) / 10,000 = $9
Depreciation expense in year 1 = $9 × 1000 = $9000
Deprecation expense in year 2 = $9 × 2000 = $18,000
Deprecation expense in year 3 = $9 x 4000 = $36,000
Total depreciation expense = $36,000 + $18,000 + $9,000 = $63,000
Net book value = $100,000 - $63,000 = $37,000
I hope my answer helps you
