Practice 11-6 Computing Service-Hours Depreciation
The company acquired a machine on January 1 at an original cost of $75,000. The machine’s estimated residual value is $15,000, and its estimated life is 20,000 service hours. The actual usage of the machine was as follows: Year 1, 9,000 hours; Year 2, 5,000 hours; Year 3, 4,000 hours; Year 4, 2,000 hours. Compute (1) depreciation expense for each year of the machine’s life and (2) book value at the end of each year of the machine’s life.