Only Organics has a delivery truck that was purchased for $48,000 and has a salvage value of $4,000. It expects the truck to last 200,000 miles. During Year 1, the truck traveled 32,500 miles and during Year 2, the truck traveled 29,500 miles. What is the depreciation expense for Year 2 to the nearest dollar using the units-of-production method? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on the actual usage of the asset. First, calculate the depreciation rate per mile: ($48,000 - $4,000) / 200,000 miles = $0.22 per mile. Then, for Year 2, multiply this rate by the miles driven: $0.22 * 29,500 miles = $6,490.

Only Organics Has a Delivery Truck That Was Purchased for $48,000