Using the activity method, calculate the first two years of depreciation expense for a piece of equipment

Question:

Using the activity method, calculate the first two years of depreciation expense for a piece of equipment that cost $85,000, has an estimated useful life of 5,000,000 hours, and has an estimated salvage value of $5,000. The number of hours used each year is as follows:

Year 1........1,250,000

Year 2........1,000,000

Year 3........ 650,000

Year 4........ 850,000

Year 5........1,250,000

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...