On January 1, 2016, a corporation acquired a truck for $100,000
Residual value was estimated to be $20,000. The truck can be driven for 50,000 miles over the next three years. Actual usage of the truck was recorded as 8,640 miles for the first year. Give the journal entry to record depreciation for the first year calculated as per the units-of-production method. (Do not round your intermediate calculations.)
What will be an ideal response
Depreciation Expense—Truck 13,824
Accumulated Depreciation—Truck 13,824 .Depreciation per year = (Cost - Residual value) / Estimated total units
Rate of depreciation = ($100,000 - $20,000 ) / 50,000 = $1.60/mile
Depreciation for the first year = 8,640 miles x $1.60/mile = $13,824
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