Question

A truck acquired at a cost of $250,000 has an estimated residual value of $12,700, has...

A truck acquired at a cost of $250,000 has an estimated residual value of $12,700, has an estimated useful life of 42,000 miles, and was driven 2,900 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 $
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Homework Answers

Answer #1

(a) The depreciable cost = $237,300

Explanation:

The depreciable cost = Acquisition cost - Residual value

= $250,000 - $12,700 = $237,300.

(b) The depreciation rate = $5.65 per mile

Explanation:

The depreciation rate = The depreciable cost / Estimated useful life in miles

= $237,300 / 42,000 miles = $5.65 per mile.

(c). The units-of-activity depreciation for the year = $16,385

Explanation:

The units-of-activity depreciation for the year = Miles during the year * The depreciation rate

= 2,900 miles * $5.65 per mile = $16,385.

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