The price of a corporate limo purchased by Bob's Limos was $42,900. Its salvage value after operating for 90,000 miles is $5,577. Based on the given annual usage, prepare a UOP (Units-of-Production) depreciation schedule, then enter the annual depreciation for year 5 as your answer. (Round all amounts to the nearest cent) $$\begin{array} { l l }
\text { Years } & \text { Miles } \
\hline 1 & 17,175 \
2 & 22,264 \
3 & 21,840 \
4 & 19,508 \
5 & 25,233 \
\hline
\end{array}$$

Question

The price of a corporate limo purchased by Bob's Limos was $42,900. Its salvage value after operating for 90,000 miles is $5,577. Based on the given annual usage, prepare a UOP (Units-of-Production) depreciation schedule, then enter the annual depreciation for year 5 as your answer. (Round all amounts to the nearest cent) $$\begin{array} { l l } 
\text { Years } & \text { Miles } \
\hline 1 & 17,175 \
2 & 22,264 \
3 & 21,840 \
4 & 19,508 \
5 & 25,233 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The total cost of the limo is $42,900 and its salvage value is $5,577, leaving a depreciable base of $42,900 - $5,577 = $37,323. The total miles driven over its useful life is 90,000 miles. The depreciation per mile is $37,323 / 90,000 = $0.4147. In year 5, the limo was driven 25,233 miles, so the depreciation for year 5 is 25,233 miles * $0.4147/mile = $10,468.41, rounded to the nearest cent.

The Price of a Corporate Limo Purchased by Bob's Limos