At the beginning of the year, we purchased a generator for $ 56,000. We expect then generator to have a useful life of 12 years, or 60,000 hours. The residual value of the generator at the end of its life is expected to be $ 5,600. We actually used the generator 3,500 hours in the past year. The depreciation charged for the generator in the past year using the Units of Production method

Question

At the beginning of the year, we purchased a generator for $ 56,000.  We expect then generator to have a useful life of 12 years, or 60,000 hours.  The residual value of the generator at the end of its life is expected to be $ 5,600.  We actually used the generator 3,500 hours in the past year.  The depreciation charged for the generator in the past year using the Units of Production method

Explain Bot · Answer

To calculate the depreciation charged for the generator using the Units of Production method, we need to know the total number of hours the generator is expected to be used over its useful life, and the number of hours it was actually used in the past year. First, let's calculate the depreciation rate per hour: Depreciation rate = (Cost - Residual value) / Total expected hours Depreciation rate = ($56,000 - $5,600) / 60,000 = $50,400 / 60,000 = $0.84 per hour Next, we can calculate the depreciation expense for the past year: Depreciation expense = Depreciation rate x Actual hours used Depreciation expense = $0.84 per hour x 3,500 hours = $2,940 Therefore, the depreciation charged for the generator in the past year using the Units of Production method is $2,940.