Bixby Corporation purchased a forklift for $40,000 on July 1. The forklift has an estimateduseful life of 20,000 usage hours with a residual value of $8,000. Bixby uses the units-ofproduction method for depreciation. If Bixby uses the forklift for 6,400 hours during thefirst year, the depreciation expense on the forklift would bea. $8,000.b. $10,240.c. $12,800.d. $40,000.

Bixby Corporation purchased a forklift for $40,000 on July 1. The forklift has an estimateduseful life of 20,000 usage hours with a residual value of $8,000. Bixby uses the units-ofproduction method for depreciation. If Bixby uses the forklift for 6,400 hours during thefirst year, the depreciation expense on the forklift would bea. $8,000.b. $10,240.c. $12,800.d. $40,000.

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Description: Bixby Corporation purchased a forklift for $40,000 on July 1. The forklift has an estimateduseful life of 20,000 usage hours with a residual value of $8,000. Bixby uses the units-ofproduction method for depreciation. If Bixby uses the forklift for 6,

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4EB: Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is...

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Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
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Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
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