Question

Sandhill Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 157,000 miles. Taxi 10 cost $31,600 and is expected to have a salvage value of $200. Taxi 10 was driven 30,000 miles in 2021 and 34,400 miles in 2022.

Determine the depreciation cost. (Round answer to 2 decimal places, e.g. 1.25.) Depreciable cost $enter the depreciation per unit rounded to two decimal places in dollars per unit LINK TO TEXT

Compute the depreciation for each year. 2021 2022 Depreciation expense $enter the depreciation for 2021 rounded to 0 decimal places in dollars $enter the depreciation for 2022 rounded to 0 decimal places in dollars

Answer 1

CALCULATION OF THE DEPRECIATION AS PER UNITS OF ACTIVITY METHOD
Purchase Cost of Car	$                                   31,600.00
Less: Salvage Value =	$                                         200.00
Net Value for Depreciation =	$                                   31,400.00
Expected to drivein in Miles	1,57,000.00	Miles
Depreciation per Miles	$                                             0.20	Per Miles
($ 31,400 / 157,000 Miles)
Calculation 2021 Depreciation expenss :
Depreciation per Miles	0.20
Driven of taxi in miles in year of 2021	30,000
Depreciation in 2021	$                                           6,000
Calculation 2022 Depreciation expenss :
Depreciation per Miles	0.20
Driven of taxi in miles in year of 2021	34,400.00
Depreciation in 2022	$                                           6,880