A truck costs $320,000 and is expected to be driven 116,000 miles during its five-year life. Residual value is expected to be zero. If the truck is driven 29,000 miles during the first year, how much depreciation should the business record under the units-of-production method? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

a.$98,600

b.$80,040

c.$26,680

d.$51,040

Question

Pongo

Business

21 January, 01:39

A truck costs $320,000 and is expected to be driven 116,000 miles during its five-year life. Residual value is expected to be zero. If the truck is driven 29,000 miles during the first year, how much depreciation should the business record under the units-of-production method? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

a.$98,600

b.$80,040

c.$26,680

d.$51,040

+4

Answers (1)

Know the Answer?

Erin · Answer 1

Option B, $80,040 (Nearest dollar)

Solution:

Given,

Truck costs $320,000

Expected to be driven 116,000 miles

Truck is driven 29,000 miles

To calculate depreciation should the business record under the units-of-production method,

Depreciation per mile = $320,000 / $116,000

= $2.75

Depreciation for the first year = $2.75 x 29,000

= $79,750 (Nearest dollar is the answer)