Question

Units-of-activity Depreciation A truck acquired at a cost of $160,000 has an estimated residual value of $10,350, has an estimated useful life of 41,000 miles, and was driven 3,300 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places. (a) The depreciable cost $fill in the blank 1 (b) The depreciation rate $fill in the blank 2 per mile (c) The units-of-activity depreciation for the year $fill in the blank 3

Answer 1

Cost of Truck = $160,000

Residual Value = $10,350

Useful Life = 41,000 miles

a. Depreciable Cost = Cost of Truck / Residual Value

Depreciable Cost = $160,000 - $10,350

Depreciable Cost = $149,650

b. Depreciation Rate = Depreciable Cost / Useful Life

Depreciation Rate = $149,650 / 41,000

Depreciation Rate = $3.65 per mile

c. Number of miles driven during the year = 3,300

Depreciation for the Year = Depreciation Rate * Number of miles driven during the year

Depreciation for the Year = $3.65 per mile * 3,300

Depreciation for the Year = $12,045