Question

A truck acquired at a cost of $260,000 has an estimated residual value of $12,750, has...

A truck acquired at a cost of $260,000 has an estimated residual value of $12,750, has an estimated useful life of 43,000 miles, and was driven 3,400 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 $
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Homework Answers

Answer #1

The computation is shown below:-

(a) The Depreciable cost = Cost of the assets - Residual value

= $260,000 - $12,750

= $247,250

So, the depriciable cost is $247,250

(b) The depreciable rate = Depreciable cost / Estimated useful life

= $247,250 / 43,000

= $5.75 per mile

So, the depreciable rate is $5.75 per mile

(c) The units-of-activity depreciation for the year = Depreciation rate * Driven mile

= $5.75 * 3,400

= $19,550

So, the units-of-activity depreciation for the year is $19,550

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