Question

A diesel-powered tractor with a cost of $186,240 and estimated residual value of $5,700 is expected to have a useful operating life of 59,000 hours. During April, the tractor was operated 200 hours.

Answer 1

$612

Step-by-step explanation:

To compute the depreciation, first we have to compute the depreciation per hour which is given below:

= (Cost of diesel-powered tractor - estimated residual value) ÷ (useful operating life)

= ($186,240 - $5,700) ÷ (59,000 hours)

= ($180,540) ÷ (59,000 hours)

= $3.06 per hour

Now the depreciation would be

= Operated hours × depreciation per hour

= 200 units × $3.06

= $612