medium · Financial Accounting assets
Vanguard Air uses the units-of-production method for its aircraft engines. An engine cost $8,000,000 with a salvage value of $1,000,000 and a life of 20,000 flight hours. In Year 1, the engine was used for 3,000 hours. In Year 2, usage increased to 4,500 hours.
What is the book value of the engine at the end of Year 2?
- $4,375,000
- $6,950,000
- $5,000,000
- $5,375,000
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