On January 1,2019,Wasson Company purchased a delivery vehicle costing $40,000.The vehicle has an estimated 6-year life and a $4,000 residual value. Wasson uses the units-of-production depreciation method and Wasson estimates that the vehicle will be driven 100,000 miles.What is the vehicle's book value as of December 31,2020,assuming the vehicle was driven 10,000 miles during 2019 and driven 18,000 miles during 2020?

Question

Quizplus · Accepted Answer

Depreciation expense for 2019 = ($40,000 - $4,000) / 100,000 miles * 10,000 miles = $3,600Depreciation expense for 2020 = ($40,000 - $4,000) / 100,000 miles * 18,000 miles = $6,480Book value as of December 31, 2020 = $40,000 - $3,600 - $6,480 = $29,920

On January 1,2019,Wasson Company Purchased a Delivery Vehicle Costing $40,000