On January 2, 2019. Konrad Corporation acquired equipment for $500,000. The estimated life of the equipment is 5 years or 18,000 hours. The estimated residual value is $14,000. If Konrad Corporation uses the units of production method of depreciation, what will be the debit to Depreciation Expense for the year ended December 31, 2020, assuming that during this period, the asset was used 6,000 hours? O A. $97,200 O B. $166,667 OC. $171,333 OD. $162,000 point
To determine the debit to Depreciation Expense using the units of production method, we need to calculate the depreciation rate and then multiply it by the number of hours used in the given period.
Step 1: Calculate the total depreciation for the equipment.
Total Depreciation = Cost of Equipment - Residual Value
Total Depreciation = $500,000 - $14,000
Total Depreciation = $486,000
Step 2: Calculate the depreciation rate per hour of usage.
Depreciation Rate = Total Depreciation / Total Estimated Hours
Depreciation Rate = $486,000 / 18,000 hours
Depreciation Rate = $27 per hour
Step 3: Calculate the depreciation expense for the given period.
Depreciation Expense = Depreciation Rate per hour * Number of hours used
Depreciation Expense = $27 * 6,000 hours
Depreciation Expense = $162,000
Therefore, the debit to Depreciation Expense for the year ended December 31, 2020, assuming that during this period, the asset was used 6,000 hours, is option D. $162,000.