Question

Marigold Industries purchased a truck at the beginning of 2020 for $109300. The truck is estimated to have a salvage value of $3200 and a useful life of 117000 miles. It was driven 21000 miles in 2020 and 29000 miles in 2021. What is the depreciation expense for 2021?

$27885

$26303

$45350

$7073

Answer 1

SOLUTION =
	CALCULATION OF THE DEPRECIATION AS PER UOP METHOD
	Purchase Cost of Equipment =	$                  1,09,300
	Less: Salvage Value =	$                        3,200
	Net Value for Depreciation (A)	$                  1,06,100
	Expected to Produce Hours (B)	1,17,000	Miles
	Depreciation per Hours = (A/B)	$                        0.907	Per Miles
	DEPRECIATION SCHEDULE - UNIT OF PRODUCTION METHOD
			DEPRECIATION EXPENSS OF THE YEAR
	Year	Assets Cost	Miles Runs	X	Rate Per Miles	=	Depreciaiton Expenses	Accumulated Depreciation	Book Value
	Purchase Price	1,09,300							$       1,09,300
	2020		21,000	X	0.907	=	$               19,047	$             19,047	$           90,253
	2021		29,000	X	0.907	=	$               26,303	$             45,350	$           63,950
Answer = Option 2 = $ 26,303