Question

a vehicle is purchased for $60,000 has an estimated useful life of five years and a...

a vehicle is purchased for $60,000 has an estimated useful life of five years and a residual value of $4000. it is expected to be driven 180,000 km over its useful life. that I it was driven 50,000 km in the first year and 65,000 km in the second year. The company uses the units of production method,

depreciation for the second year:
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Homework Answers

Answer #1

Depreciation for the second year = $20,150

Explanation

Formula for Units of Production Depreciation
Depreciation = (Cost - Salvage Value) / Units Produced
                    = (60,000 - 4,000) / 180,000
                    = $ 0.31 per unit depreciation rate
Calculation of second year Depreciation Expense
Depreciation per unit Rate $         0.31
Units produced in second year     65,000.00
Depreciation in second year $ 20,150.00
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