Question

velco purchased a delivery truck at the beginning of year 1 at a cost of $60,000. the truck is estimated to have a useful life of 5 years to velco and an estimated salvage value of $10,000. it is estimated that the truck will be driven 100,000 miles during velco's ownership period. the balance of the accumulated depreciation account at the end of year 3 (the third year of the asset's life) under the units-of-production method would be:

Answer 1

The balance of the accumulated depreciation account at the end of year 3 under the units-of-production method is $15,000.

Step-by-step explanation:

The balance of the accumulated depreciation account at the end of year 3 under the units-of-production method can be calculated by determining the depreciation expense per mile and multiplying it by the total miles driven in year 3.

To calculate the depreciation expense per mile, we subtract the salvage value from the cost and divide it by the total miles the truck is expected to be driven during its useful life: ($60,000 - $10,000) / 100,000 miles = $0.50 per mile.

So, in year 3, if the truck has already been driven for 30,000 miles, the accumulated depreciation would be $0.50 x 30,000 miles = $15,000.

Answer 2

The balance of the accumulated depreciation account at the end of year 3 can be calculated using the units-of-production method.

Step-by-step explanation:

The question is related to the depreciation of the delivery truck purchased by Velco at the beginning of year 1.

Under the units-of-production method, the balance of the accumulated depreciation account at the end of year 3 can be calculated based on the number of miles driven by the truck.

Using the formula:

Depreciation Expense = (Cost - Salvage Value) / Total Units of Production

where Total Units of Production = 100,000 miles, and Cost = $60,000 - $10,000 (Salvage Value), we can calculate the depreciation expense for each mile driven. By multiplying the depreciation expense per mile by the total number of miles driven in year 3, the accumulated depreciation at the end of year 3 can be determined.

For example: if the depreciation expense per mile is $0.50 and the truck was driven 30,000 miles in year 3, the accumulated depreciation at the end of year 3 would be $15,000.