Question

Calculate depreciation expense per mile under units-of-activity method Sarasota Company purchased a delivery truck for $33,000 on January 1, 2020. The truck has an expected salvage value of $1,680, and is expected to be driven 108,000 miles over its estimated useful life of 10 years. Actual miles driven were 16,000 in 2020 and 11,300 in 2021.

Answer 1

Answer:

$0.29 per mile

Explanation:

The computation of the depreciation per miles under the units-of-production method is shown below:

= (Original cost - expected salvage value) ÷ (estimated miles)

= ($33,000 - $1,680) ÷ (108,000 miles)

= ($31,320) ÷ (108,000 miles)

= $0.29 per mile

Simply we deduct the expected salvage value from the original cost and then divide it by estimated miles so that per mile can come