On January 1, 2017, a corporation acquired a truck for $600,000
The residual value was estimated to be $20,000. The truck can be driven for 50,000 miles over the next three years. The actual usage of the truck was 8,640 miles for the first year. Calculate the rate of depreciation to be applied and depreciation for the first year using the units-of-production method. (Do not round your intermediate calculations.)
What will be an ideal response
Depreciation per unit = (Cost - Residual value) / Useful life in units
Rate of depreciation = [$600,000 (Acquisition price) - $20,000 (Residual value)] / 50,000 miles = $11.60 / mile
Depreciation for the first year = 8,640 miles x $11.60 / mile = $100,224
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