Question

A​ diesel-powered generator with a cost of ​$72 comma 000 is expected to have a useful operating life of 60 comma 000 hours. The expected salvage value of this generator is ​$7 comma 200. In its first operating​ year, the generator was operated for 4 comma 900 hours. Determine the depreciation for the year.

Answer 1

Annual depreciation= $5,292

Step-by-step explanation:

Giving the following information:

A​ diesel-powered generator with a cost of ​$72,000 is expected to have a useful operating life of 60,000 hours. The expected salvage value of this generator is ​$7,200. In its first operating​ year, the generator was operated for 4,900 hours.

I will calculate the depreciation using the useful life method:

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

Annual depreciation= [(72,000 - 7,200)/60,000]*4,900= $5,292