On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $45,000. The cab has an expected salvage value of $8000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 54,000 miles the first year and 57,000 the second year. What would be the depreciation expense reported on the Year 2 income statement and the book value of the taxi, respectively, at the end of Year 2? Select one: O A. $12,825 and $12,025. O B. $10,545 and $24,465. O C. $10,545 and $16,465. O D. $12,825 and $20,025.

On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $45,000. The cab has an expected salvage value of $8000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 54,000 miles the first year and 57,000 the second year. What would be the depreciation expense reported on the Year 2 income statement and the book value of the taxi, respectively, at the end of Year 2? Select one: O A. $12,825 and $12,025. O B. $10,545 and $24,465. O C. $10,545 and $16,465. O D. $12,825 and $20,025.

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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