Machine Hour Rate Depreciation Formula

Machine Hour Rate Depreciation Formula

In this method the useful life of the machine is divided by the total expected number of hour from machine.

Depreciation Rate = useful life/machine hours

Example

Cost            = 100,000

Residual value = 10,000

Machine hours = 8000

Depreciation Rate=

Solution

Depreciable amount = 100,000-10,000

=90,000

Depreciation Rate = 90,000/8000

= 11.25