A utility vehicle purchased by Knox Industries should last 110,000 miles. The acquisition cost was $21,400 and the salvage value is $1,926. Using the UOP depreciation method, given the annual usage information, calculate the accumulated depreciation at the end of year 2. (Round all dollar amounts to the nearest cent) $$\begin{array} { l l l l }
\text { YEAR } & \text { MILES } & \text { YEAR } & \text { MILES } \
\hline 1 & 22,029 & 2 & 22,724 \
3 & 23,420 & 4 & 23,188
\end{array}$$
A) $7,922.99
B) $4,090.32
C) $13,344.46
D) $4,215.60

Question

A utility vehicle purchased by Knox Industries should last 110,000 miles. The acquisition cost was $21,400 and the salvage value is $1,926. Using the UOP depreciation method, given the annual usage information, calculate the accumulated depreciation at the end of year 2. (Round all dollar amounts to the nearest cent) $$\begin{array} { l l l l } 
\text { YEAR } & \text { MILES } & \text { YEAR } & \text { MILES } \
\hline 1 & 22,029 & 2 & 22,724 \
3 & 23,420 & 4 & 23,188
\end{array}$$
A) $7,922.99
B) $4,090.32
C) $13,344.46
D) $4,215.60

Quizplus · Accepted Answer

The correct answer is A. $7,922.99. The UOP depreciation method calculates depreciation based on the percentage of total usage that has occurred during the year. In this case, the total usage is 110,000 miles, and the vehicle has been used for 22,029 miles in year 1 and 22,724 miles in year 2. Therefore, the percentage of total usage that has occurred during year 2 is (22,724 / 110,000) * 100% = 20.66%. The depreciation for year 2 is therefore $21,400 * 20.66% = $4,430.32. The accumulated depreciation at the end of year 2 is therefore $4,430.32 + $3,492.67 (the depreciation for year 1) = $7,922.99.

A Utility Vehicle Purchased by Knox Industries Should Last 110,000