Kaven Corporation purchased a truck at the beginning of 2016 for $75,000 which will be depreciated using the units-of-output method.The truck is estimated to have a residual value of $3,000 and a useful life of 4 years and 120,000 miles.It was driven 18,000 miles in 2016 and 32,000 miles in 2017.What is the depreciation expense for 2017?
A)$18,750
B)$19,200
C)$20,000
D)$32,000

Question

Quizplus · Accepted Answer

We first need to calculate the depreciation rate per mile:
Depreciable cost = $75,000 - $3,000 = $72,000
Depreciation rate per mile = Depreciable cost / Estimated total miles
Depreciation rate per mile = $72,000 / 120,000 miles = $0.6 per mile

Next, we calculate the depreciation expense for 2017:
Depreciation expense = Depreciation rate per mile x Number of miles driven in 2017
Depreciation expense = $0.6 per mile x 32,000 miles = $19,200

Therefore, the answer is B) $19,200.

Kaven Corporation Purchased a Truck at the Beginning of 2016