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klemol [59]
3 years ago
8

A truck acquired at a cost of $80,000 has an estimated residual value of $8,000, has an estimated useful life of 200,000 miles,

and was driven 18,000 miles during the year. Determine the following. If required, round your answer for the depreciation rate to 2 decimal places. (a) The depreciable cost (b) The depreciation rate (c) The units-of-activity depreciation for the year per mile
Business
1 answer:
laila [671]3 years ago
6 0

Answer:

a. The depreciable cost is $72000.

b. The depreciation rate is $0.36 per mile.

c. The depreciation expense for the year is $6480.

Explanation:

a.

The depreciable cost is the cost that is eligible for depreciation. It is calculated by deducting the residual value from the cost of the asset.

Depreciable cost = Cost - residual value

Depreciable cost = 80000 - 8000 = $72000

b.

The depreciation rate can be calculated by dividing the depreciable cost by the total estimated useful life of the asset.

The depreciable rate = 72000 / 200000 = $0.36 per mile driven

c.

The units of activity depreciation for the year is,

Depreciation expense = 0.36 * 18000 = $6480

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