An industrial air conditioner with an expected useful operating life of 30.000 hours costs $45,000. It is known that the salvage value of the air conditioner is $10,000 at the end of its useful life. The total working time of the air conditioner diuring first year is 4,000 hours. Find the depreciation for the first year by using the unit-of-production met hod. A) $5,333.33 B) $4,666.67 C) $6,000.00 D) Answers A, B and C are not correct

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Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.