A truck acquired at a cost of $69,000 has an estimated residual value of $12,000, has an estimated useful life of 300,000 miles, and was driven 77,000 miles during the year. Determine (A) the depreciable cost, (B) the depreciation rate, and (C) the units-of-activity depreciation for the year.

Question

Dawson Booth

Business

4 January, 11:17

A truck acquired at a cost of $69,000 has an estimated residual value of $12,000, has an estimated useful life of 300,000 miles, and was driven 77,000 miles during the year. Determine (A) the depreciable cost, (B) the depreciation rate, and (C) the units-of-activity depreciation for the year.

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Answers (1)

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Emmalee Francis · Answer 1

A. $57,000

B. $0.19 per mile

C. $14,630

Explanation:

A. The computation of the depreciable cost is shown below:

= Acquired cost - estimated residual value

= $69,000 - $12,000

= $57,000

B. The computation of the depreciable rate is shown below:

= Depreciable cost : estimated useful life in miles

= $57,000 : 300,000 miles

= $0.19 per mile

C. The computation of the units-of-activity depreciation for the year is shown below:

= Driven * depreciation per miles

= 77,000 miles * $0.19

= $14,630