Jackson Incorporated purchased a truck for $36,000. The truck had a useful life of 150,000 miles over 4 years and a $6,000 salvage value. Jackson drove the truck 40,000 miles in Year 1 and 24,000 miles in Year 2. If Jackson uses the units-of-production method, what is the accumulated depreciation at the end of Year 2?

Question

Quizplus · Accepted Answer

The depreciation per mile is calculated as follows:
($36,000 - $6,000) ÷ 150,000 miles = $0.2/mile

Year 1 depreciation: $0.2/mile x 40,000 miles = $8,000
Year 2 depreciation: $0.2/mile x 24,000 miles = $4,800

Accumulated depreciation at the end of Year 2:
$8,000 (Year 1) + $4,800 (Year 2) = $12,800

Jackson Incorporated Purchased a Truck for $36,000