Question

A truck costs $316,000 and is expected to be driven 116000 miles during its five-year life. Residual 45 value is expected to be zero. If the truck is driven 27,000 miles during the first year, how much deprecilation should the business record under the units-of-production method? (Round any intermediate calculations to hwo decimal places, and your final answer to the nearest dollar.)A) $73,440 B) $98,600 C) $44,440 D) $24,480

Answer 1

Answer:A) $73,440

Explanation:

In the unit of production method, the amount expensed is based on the proportion of the asset used in relation to the total expected value of use.

unit of production method = (Original cost - Salvage value) × (actual value used/total expected value )

=$316000 - 0 × (27000/116000) = $72680