Question

Question 33 1 pts On January 1 of the current year (Year 1), our company acquired a truck for $75,000. The estimated useful life of the truck is 5 years or 100,000 miles. The residual value at the end of 5 years is estimated to be $5,000. The actual mileage for the truck was 22,000 miles in Year 1 and 27,000 miles in Year 2. What is the book value at the end of the first year of use (Year 1) after we complete the adjusting entry if we use the units of production method? $59,600 0 $56,100 0 $54,600 0 $51,100

Answer 1

Correct answer-----------$59,600

Working

Units of Production method
A	Cost	$ 75,000
B	Residual Value	$ 5,000
C=A - B	Depreciable base	$ 70,000
D	Usage in units(in Miles)	100000
E	Depreciation per mile	$ 0.70

.

Depreciation schedule-Units of Activity
Year	Book Value	Usage	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$                75,000	22000	$                   15,400	$                    15,400	$               59,600