Question

The battery in an MP3 player cost $70. It has an estimated useful life of 500 service-hours and a trade-in value of $0 at the end of its useful life. In the first year, the MP3 player was used for 400 hours. Use the service hours method to find the depreciation charges for the first year. a. $56.00 b. $59.00 c. $61.00 d. $64.00

Answer 1

a. $56.00

Depreciation charges = $7/50 × 400 = $56.00

Explanation:

Depreciation rate R = (initial value - scrap value)/useful life

Depreciation rate R = (70-0)/500 = $7/50 per hour

For the first 400 hours, the depreciation charges is;

Depreciation charges = depreciation rate × time

Depreciation charges = $7/50 × 400 = $56.00

Depreciation charges = $56.00