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2 March, 03:20

Digger Company purchased a truck that cost $26,000. The company expected to drive the truck 100,000 miles. The truck had an estimated salvage value of $2,000. If the truck is driven 36,000 miles in the current accounting period, which of the following amounts should be recognized as depreciation expense?

A. $8,640.

B. $9,360.

C. $8,000.

D. $8,280.

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  1. 2 March, 03:46
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    A. $8,640.

    Explanation:

    Formula: Units of Production Depreciation

    Annual Depreciation=Depreciable Value*Units produced during the year/Estimated total production

    Annual Depreciation = $24,000 * 36,000/100,000 = $ 8640

    Depreciable Value = Original cost - Scrap value = $26,000 - $ 2000 = $ 24000
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