Katie, your Accounting Manager, has asked you to calculate the depreciation for the new company car. The company purchased the new car on May 1, 2018.The purchase price was $22,600 and had a useful life of 3 years.The salvage or residual amount is 5% of the purchase price.Katie estimated that the car would be driven for 93,000 total miles.In year 1, the car was driven 48,900 miles. In year 2, the car was driven 35,180 miles, and in year 3, the car was driven 12,300 miles.Round the cost per mile to two decimal places. Calculate the total depreciation expense in Years 1 through 3 using the units of activity (production) method.

The objective of this question is to calculate the total depreciation expense for a company car over…

Answered: Katie, your Accounting Manager, has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Katie, your Accounting Manager, has asked you to calculate the depreciation for the new company car. The company purchased the new car on May 1, 2018.

The purchase price was $22,600 and had a useful life of 3 years.
The salvage or residual amount is 5% of the purchase price.
Katie estimated that the car would be driven for 93,000 total miles.
In year 1, the car was driven 48,900 miles. In year 2, the car was driven 35,180 miles, and in year 3, the car was driven 12,300 miles.

Round the cost per mile to two decimal places. Calculate the total depreciation expense in Years 1 through 3 using the units of activity (production) method.

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