On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. Marino planned to drive the truck for 100,000 miles and then to sell it. The truck was expected to have an $8,000 salvage value. The truck was actually driven 40,000 miles during Year 1, 20,000 miles during Year 2, 35,000 miles during Year 3 and 10,000 miles during Year 4. If Marino uses the units-of-production method, the amount of accumulated depreciation shown on the Year 3 balance sheet is:___. a - $38,000. b - $40,000. c - $24,000. d - $24,000.

Question

Business

Laney Gardner

25 June, 17:42

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. Marino planned to drive the truck for 100,000 miles and then to sell it. The truck was expected to have an $8,000 salvage value. The truck was actually driven 40,000 miles during Year 1, 20,000 miles during Year 2, 35,000 miles during Year 3 and 10,000 miles during Year 4. If Marino uses the units-of-production method, the amount of accumulated depreciation shown on the Year 3 balance sheet is:___. a - $38,000. b - $40,000. c - $24,000. d - $24,000.

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Answers (1)

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Jordyn Sawyer · Answer 1

a - $38,000

Explanation:

Units-of-production method of depreciation is a method in which depreciation is charged based on the output given by the asset in a period.

Truck Purchase price = $48,000

Estimated unit for depreciation = $100,000 miles

Salvage value = $8,000

Total Millage in 3 years = 40,000 + 20,000 + 35,000 = 95,000 miles

Accumulated Depreciation = (Initial cost - Salvage value) Driven Millage / estimated total Millage

Accumulated Depreciation = ($48,000 - $8,000) 95,000 / 100,000 = $38,000