Speedy Taxi Service uses the units-of-production method in calculating depreciation on its taxicabs. Each cab is expected to 551,000 km. Taxi 10 cost $46,996 and is expected to have a residual value of $5,120. Taxi 10 is driven 91,000 km in 2023, and km in 2024. (a) Calculate the depreciable amount per kilometre. (Round depreciable amount per unit to 3 decimal places, e.g. 5.276.) Depreciable cost per kilometre $ (b) Calculate the depreciation expense for 2023 and 2024. Depreciation 2023 $ /km.
Speedy Taxi Service uses the units-of-production method in calculating depreciation on its taxicabs. Each cab is expected to 551,000 km. Taxi 10 cost $46,996 and is expected to have a residual value of $5,120. Taxi 10 is driven 91,000 km in 2023, and km in 2024. (a) Calculate the depreciable amount per kilometre. (Round depreciable amount per unit to 3 decimal places, e.g. 5.276.) Depreciable cost per kilometre $ (b) Calculate the depreciation expense for 2023 and 2024. Depreciation 2023 $ /km.
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Speedy Taxi Service uses the units-of-production method in calculating depreciation on its taxicabs. Each cab is expected to be driven
551,000 km. Taxi 10 cost $46,996 and is expected to have a residual value of $5,120. Taxi 10 is driven 91,000 km in 2023, and 136,000
km in 2024.
(a) Calculate the depreciable amount per kilometre. (Round depreciable amount per unit to 3 decimal places, e.g. 5.276.)
Depreciable cost per kilometre $
(b) Calculate the depreciation expense for 2023 and 2024.
Depreciation-2023 $
Depreciation 2024 $
/km.
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