A truck acquired at a cost of $260,000 has an estimated residual value of $12,550, has...

A truck acquired at a cost of $260,000 has an estimated residual value of $12,550, has an estimated useful life of 49,000 miles, and was driven 3,900 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places.

(a)	The depreciable cost	$
(b)	The depreciation rate	$	per mile
(c)	The units-of-activity depreciation for the year	$

Solutions

Expert Solution

Solution

(a)	The depreciable cost	$	$247,450
(b)	The depreciation rate	$ 5.05	per mile
(c)	The units-of-activity depreciation for the year	$ 19,695

Working

Units of activity method
A	Cost	$ 260,000
B	Residual Value	$ 12,550
C=A - B	Depreciable base	$ 247,450
D	Usage in units(in Hours)	49,000
E	Depreciation per hour	$ 5.05

Depreciation schedule-Units of Activity
Year	Book Value	Usage	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$ 260,000	3900	$ 19,695	$ 19,695	$ 240,305

ekkarill92 answered 1 year ago

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