Question

Exercise 10-07 a1-b2 Bramble Company purchased a delivery truck for $26,000 on January 1, 2020. The truck has an expected salvage value of $1,160, and is expected to be driven 108,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,500 in 2020 and 14,700 in 2021. Calculate depreciation expense per mile under units-of-activity method.

Answer 1

2020 = $3,565

2021 = $3,381

Step-by-step explanation:

Depreciation Expense per mile:

= (Cost of delivery truck - Salvage value) ÷ Expected miles driven

= (26,000 - 1,160) ÷ 108,000

= 0.23

Depreciation Expense for 2020:

= Depreciation Expense per mile × Actual miles driven

= $0.23 × 15,500

= $3,565

Depreciation Expense for 2021:

= Depreciation Expense per mile × Actual miles driven

= $0.23 × 14,700

= $3,381