Question

During the first two years, supplies, inc. drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. the company originally purchased the truck for $175,000. if the truck has an estimated life of 10 years or 300,000 miles, with an estimated residual value of $25,000, what amount of deprecation expense should supplies, inc. record in the second year using the activity-based method?

Answer 1

$175,000-$25,000=$150,000
$150,000:10=$15,000
$15,000*2=$30,000
$150,000-$30,000=$120,000
That amount would be $120,000