A roofing company purchased a work truck for $24,000 on 1/1. The truck is expected to have a 3 year life and last 100,000 miles with a salvage (residual) value of $6,000. The truck was driven 25,000 in year 1. If the company uses the activity based method to calculate depreciation expense, how much would the depreciation expense be for the first year of use?
A roofing company purchased a work truck for $24,000 on 1/1. The truck is expected to have a 3 year life and last 100,000 miles with a salvage (residual) value of $6,000. The truck was driven 25,000 in year 1. If the company uses the activity based method to calculate depreciation expense, how much would the depreciation expense be for the first year of use?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...
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Transcribed Image Text:A roofing company purchased a work truck for $24,000 on 1/1. The truck is expected to
have a 3 year life and last 100,000 miles with a salvage (residual) value of $6,000. The
truck was driven 25,000 in year 1. If the company uses the activity based method to
calculate depreciation expense, how much would the depreciation expense be for the first
year of use?
Fill in the blank with your calculated number. DO NOT include commas, $ signs, period,
decimal points, etc., just enter the raw number. Webcourses will add commas to your
answer automatically. For example, if you calculated the answer to be $24,123, you would
only input: 24123
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Expert Solution
Step 1
Under activity based method of depreciation, depreciation is calculated on the basis of usage.
Depreciation
= Depreciable amount / Total usage expected
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