Question

A truck costs $ 306 comma 000 and is expected to be driven 111 comma 000 miles during its fiveminusyear life. Residual value is expected to be zero. If the truck is driven 29 comma 000 miles during the first​ year, how much depreciation should the business record under the unitsminusofminusproduction ​method? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

=$80,620

Step-by-step explanation:

Under the unit of the production method, the cost of the asset is divided by its expected production level to determine the depreciation per unit.

For this truck, depreciation per unit

=$306,000 / 111,000 miles

=$2.78181 per mile

=$2.78 per mile

If the track is driven for $29,000 miles

The depreciation amount will be

=$2.78 x 29,000

=$80,620