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17 December, 11:02

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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  1. 17 December, 11:17
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    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
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