Answer:
Depreciation Year 1 = $1,180
Depreciation Year 2 = $4,160
Step-by-step explanation:
The computation of depreciation expense activity-based method using is shown below:-
Depreciation expense = (Cost - Salvage value) ÷ Total expected mileage to be used × Actual mileage used
By using above formula we can calculate the Depreciation Year 1 and Depreciation Year 2 which is shown below:-
Depreciation Year 1 = ($26,000 - $2,000) ÷ $120,000 × $5,900
= $24,000 ÷ $120,000 × $5,900
= $1,180
Depreciation Year 2 = ($26,000 - $2,000) ÷ $120,000 × $20,800
= $24,000 ÷ $120,000 × $20,800
= $4,160