On February 1, 2011, Delta Distribution Company purchased a delivery truck that cost $30,000. The truck has an estimated useful life of 150,000 miles and an estimated salvage value of $3,000. The truck is driven 10,000; 34,000; and 28,000 miles for the years 2011, 2012, and 2013, respectively.
Required:
1. Calculate the depreciation expense per mile using the activity (units-of-production) method.
2. Use the activity method to complete the chart below:
3.Explain why long-term assets must be depreciated,rather than recorded as expenses in the period when the asset is purchased.
4.Explain why land is NOT depreciated when other assets,such as trucks,are depreciated.

Question

On February 1, 2011, Delta Distribution Company purchased a delivery truck that cost $30,000. The truck has an estimated useful life of 150,000 miles and an estimated salvage value of $3,000. The truck is driven 10,000; 34,000; and 28,000 miles for the years 2011, 2012, and 2013, respectively.
Required:
1. Calculate the depreciation expense per mile using the activity (units-of-production) method.
2. Use the activity method to complete the chart below:
 3.Explain why long-term assets must be depreciated,rather than recorded as expenses in the period when the asset is purchased.
4.Explain why land is NOT depreciated when other assets,such as trucks,are depreciated.

Quizplus · Accepted Answer

The Answer of On February 1, 2011, Delta Distribution Company purchased a delivery truck that cost $30,000. The truck has an estimated useful life of 150,000 miles and an estimated salvage value of $3,000. The truck is driven 10,000; 34,000; and 28,000 miles for the years 2011, 2012, and 2013, respectively.
Required:
1. Calculate the depreciation expense per mile using the activity (units-of-production) method.
2. Use the activity method to complete the chart below:
 3.Explain why long-term assets must be depreciated,rather than recorded as expenses in the period when the asset is purchased.
4.Explain why land is NOT depreciated when other assets,such as trucks,are depreciated.

On February 1, 2011, Delta Distribution Company Purchased a Delivery