Question

A diesel-powered tractor with a cost of $208,140 and an estimated residual value of $2,700 is expected to have a useful operating life of 48,000 hours. During April, the tractor was operated 300 hours.

Determine the depreciation for the month.

Answer 1

$1,284

Step-by-step explanation:

The computation of the depreciation expense is shown below

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

= ($208,140 - $2,700) ÷ ($48,000 hours)

= ($205,440) ÷ ($48,000 hours)

= $4.28 per hour

Now for the month, it would be

= Operated hours in a month × depreciation per hour

= 300 hours × $4.28

= $1,284