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16 July, 19:49

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

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  1. 16 July, 20:27
    0
    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)
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