Units-of-Production Method A light truck is purchased on January 1 at a cost of $35,000. It is expected to serve for eight years and have a salvage value of $5,000. It is expected to be used for 100,000 miles over its eight-year useful life. Using the units-of-production method, calculate the depreciation expense for the first and third years of use if the truck is driven 20,000 miles in year 1 and 24,000 miles in year 3. Depreciation Expense Year 1 Year 3

Units-of-Production Method A light truck is purchased on January 1 at a cost of $35,000. It is expected to serve for eight years and have a salvage value of $5,000. It is expected to be used for 100,000 miles over its eight-year useful life. Using the units-of-production method, calculate the depreciation expense for the first and third years of use if the truck is driven 20,000 miles in year 1 and 24,000 miles in year 3. Depreciation Expense Year 1 Year 3

Name: Units-of-Production MethodA light truck is purchased on January 1 at
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Description: Units-of-Production MethodA light truck is purchased on January 1 at a cost of $35,000. It is expected to serve foreight years and have a salvage value of $5,000. It is expected to be used for 100,000miles over its eight-year useful life. Using the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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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Question

Units-of-Production Method
A light truck is purchased on January 1 at a cost of $35,000. It is expected to serve for
eight years and have a salvage value of $5,000. It is expected to be used for 100,000
miles over its eight-year useful life. Using the units-of-production method, calculate the
depreciation expense for the first and third years of use if the truck is driven 20,000
miles in year 1 and 24,000 miles in year 3.
Depreciation Expense
Year 1
Year 3

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