A Factory Machine Was Purchased for $75,000 on January 1

question 232

Multiple Choice

A factory machine was purchased for $75,000 on January 1, 2010. It was estimated that it would have a $15,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2010. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2010 would be

• A) $7,500.
• B) $12,000.
• C) $15,000.
• D) $6,000.

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