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Marysya12 [62]
3 years ago
12

Kwik taxi service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven

140,000 miles. Taxi 10 cost $24,300 and is expected to have a salvage value of $700. Taxi 10 was driven 28,000 miles in 2016 and 33,000 miles in 2017. a) determine the depreciation cost. b) compute the depreciation expense for each year.
Business
1 answer:
zimovet [89]3 years ago
6 0

Answer:

Explanation:

Depreciation cost :

2016: <u> expected useful life</u>

           Cost - salvage value       X    usage

= <u>140,000</u>

24,300-700

=5.93*28,000 = $166,101.69

2017:  <u>expected useful life</u>

           Cost - salvage value       X    usage

= <u>140,000</u>

24,300-700

=5.93*33,000 = $195,762.71

Depreciation Expense:

2016:<u> (cost-salvage value)*actual activity performed</u>

             total estimated useful life

= <u>(24,300-700)*28,000</u>

          140,000

=$4,720

2017: <u>(cost-salvage value)*actual activity performed</u>

             total estimated useful life

= <u>(24,300-700)*33,000</u>

          140,000

=$5,562.86

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