Using a units-of-activity allocation, a loader costs $132,000, has a $12,000 salvage value and an estimated lifetime of 5,000 operating hours. What book-depreciation rate per operating hour results?
Correct Answer
B) $24.00 per hr
The depreciable amount is $132,000 − $12,000 = $120,000. Allocate it over the stated 5,000 operating hours: $24 per hour. The $26.40 option fails to subtract salvage value. This is usage-based book depreciation, not an employee wage or a tax depreciation determination.
Why This Is the Correct Answer
The depreciable amount is $132,000 − $12,000 = $120,000. Allocate it over the stated 5,000 operating hours: $24 per hour. The $26.40 option fails to subtract salvage value. This is usage-based book depreciation, not an employee wage or a tax depreciation determination.
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