A Company Paid $500,000 to Purchase Equipment and $15,000 to Have

Multiple Choice

A company paid $500,000 to purchase equipment and $15,000 to have the equipment delivered to and installed in the company's production facilities.Commercial use of the equipment began on May 1,2009.The estimated residual value of the equipment is $5,000.The equipment is expected to be used a total of 28,000 hours throughout its estimated useful life of six years.The company has an October 31,year-end and had used the equipment a total of 11,200 hours prior to the year-end.Using the units-of-production method,what amount of amortization expense (to the nearest thousand) would the company report for this equipment in the income statement prepared for the year ended October 31,2009?

A) $102,000
B) $198,000
C) $204,000
D) $206,000