Question

Sheridan Company purchased a depreciable asset for $567000. The estimated salvage value is $29000, and the estimated useful life is 10000 hours. Carson used the asset for 1700 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset in the current year

Answer 1

Annual depreciation= $91,460

Step-by-step explanation:

Giving the following information:

Purchase price= $567,000

Salvage value= $29,000

Useful life in hours= 10,000

To calculate the depreciation per year using the activity method, we need to use the following formula:

Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated

Annual depreciation= [(567,000 - 29,000) / 10,000]*1,700

Annual depreciation= 53.8*1,700

Annual depreciation= $91,460