Question

Lake Company bought a used delivery truck on January 1, 2017, for $20,000. The delivery truck was expected to remain in service 4 years (50,000 miles). Lake's accountant estimated that the truck’s residual value would be $2,000 at the end of its useful life. The truck traveled 14,000 miles the first year and 18,000 miles the second year year.

Answer 1

I THINK U MIGHT WANT TO KNOW THE DEPRECIATION OF 1ST YEAR AND 2ND YEAR

FOR CALCULATION DEPRECIATION ,YOU NEED TO CALCULATE PER MILE RATE AS GIVEN IN QUESTION

DEPRECIATION=COST - SALVAGE VALUE/ TOTAL MILES OR YEARS (IN CASE OF STRAIGHT LINE DEPRECIATION)

DEPRECIATION=$20000-$2000/50000MILES OR 4 YEARS

DEPRECIATION =.36 PERMILES OR $4500 PER YEAR

IF THEY ARE USING MILES FOR CALCULATING DEPRECIATION THEN

1ST YEAR DEPRECIATION WILL BE $5040(14000MILES * 0.36) OR IN CASE OF STRAIGHT LINE METHOD IN ALL YEARS DEPRECIATION WILL BE SAME $4500

2ND YEAR DEPRECIATION WILL BE $6480(18000MILES*0.36)