Question

a truck acquired at a cost of 475000 has an estimated residual value of $27800 has an estimated useful life of 52000 miles and was driven for 4200 miles during the year. determine the following: a) the depreciation cost b) the depreciation rate c) the United of activity depreciation for the year

Answer 1

1. Cost of the truck = $475,000

2. Residual life = $27,800

3.Estimated useful life = 52000 miles

4. Depreciable base = Cost of fixed asset - Residual Value = 475,000 - 27,800 =447,200

5. Depreciation = (Depreciable Base) / Useful Life

= ( 447,200 / 52,000) * 4200

= 36,120

6. Rate Of depreciation

   = C.Y Depreciation / ( Depreciable base) *100 ie, (5) / (4) * 100

= (36,120 / 447,200 ) * 100

= 8.077 %

7. Depreciation per unit (Based on activity ) :

= Depreciation for the period / Units of Activity in the period

= 36, 120 / 4200 miles = 8.6

answered by: anonymous