Question

Digger Company purchased a truck that cost $26,000. The company expected to drive the truck 100,000 miles. The truck had an estimated salvage value of $2,000. If the truck is driven 36,000 miles in the current accounting period, which of the following amounts should be recognized as depreciation expense?

A. $8,640.
B. $9,360.
C. $8,000.
D. $8,280.

Answer 1

Answer:

A. $8,640.

Explanation:

Formula:  Units of Production Depreciation

Annual Depreciation=Depreciable Value×Units produced during the year/Estimated total production

Annual Depreciation = $24,000 *36,000/100,000= $ 8640

Depreciable Value = Original cost – Scrap value= $26,000- $ 2000= $ 24000