Riverbed Company purchased a delivery truck for $33,000 on January 1, 2020. The truck has an expected salvage value of $2,760, and is expected to be driven 108,000 miles over its estimated useful life of 10 years. Actual miles driven were 16,800 in 2020 and 12,600 in 2021. (a1)
Riverbed Company purchased a delivery truck for $33,000 on January 1, 2020. The truck has an expected salvage value of $2,760, and is expected to be driven 108,000 miles over its estimated useful life of 10 years. Actual miles driven were 16,800 in 2020 and 12,600 in 2021. (a1)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Riverbed Company purchased a delivery truck for $33,000 on January 1, 2020. The truck has an expected salvage value of $2,760, and is expected to be driven 108,000 miles over its estimated useful life of 10 years. Actual miles driven were 16,800 in 2020 and 12,600 in 2021.
(a1)
Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.)
| Depreciation expense | $ | per mile |
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