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stering Depreciation On July 1, 20X1, ZipCo, which uses UOP depreciation, purchases for so6000. Miles with an estimated useful life of 60,000 miles and a residua driven are as follows: $36,000 a truck l value of Year 20X1 20x2 20X3 20x4 20X5 Miles 5,000 10,000 20,000 25,000 30,000 The book value of the truck on December 31, 20X3 is: a. $18,500 b. $26,000 c. $12,500 d. $33,500
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Units of production method (UOP) Depreciation per unit Cost residual value / Useful life in units = $36,000-$6,000 / 60,000 miles $ 0.5 per mile =Units of production depreciation schedule Depreciation for the year Amounts in $ Depreciation Assetper unit($ per Number of Depreciation Accumulated Book depreciation value Date cost miles) units(miles) expense July 1, 20X1 36,000 12/31/20X1 12/31/20X2 12/31/20X3 0.5 X 0.5 X 0.5 X 5,000 - 10,000 - 20,000 = 2,500 5,000 10,000 36,000 2,50033,500 7,50028,500 17,50018,500 Therefore, the answer is a. $18,500

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