Question

On January 1, Year 1, Friedman Company purchased a truck that cost $41,000. The truck had an expected useful life of 100,000 miles over 8 years and an $8,000 salvage value. During Year 2, Friedman drove the truck 20,000 miles. Friedman uses the units-of-production method. What is depreciation expense in Year 2

Answer 1

Answer:

$6,600

Explanation:

The units-of-production depreciation expense = (miles driven in year 2 / total estimated miles) × (cost of asset - Salvage value)

(20,000 / 100,000) x ($41,000 - $8,000)

0.2 x $33,000 = $6,600

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