10. On January 1, 20X1, Lavender purchased a machine that cost $20,000. It has a

Question

10. On January 1, 20X1, Lavender purchased a machine that cost $20,000. It has an estimated four year life, and a 10 percent residual value. The machine is expected to be used for a total of 1,500 productive hours over the next 4 years. During 20X1, it was used 430 hours. Using (a) straight line and (b) productive time, Lavender should report 20X1 depreciation expense as follows: Straight Line Productive Hours (a) 4,500 (b) 4,500 (c) 5,000 (d) s 5,000 S 5,160 S 5,735 S 5,160 $ 5,735 A "secret reserve" will be created if: (al 11.

Explanation / Answer

Straight line = (20000-2000)/4 = 4500 Productive hours = (20000-2000)/1500*430= 5160 Option A is correct

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