A company purchased a van at a cost of $42,000 and expects it can be sold...
A company purchased a van at a cost of $42,000 and expects it can be sold for $6,000 after 120,000 miles of service. Assuming the units-of-production method is used and the van is driven for 24,000 miles during the first year, the depreciation at the end of the first year would be
a.$1,200.
b.$4,200.
c.$12,000.
d.$7,200.
Homework Answers
Depreciation per mile = (42,000 - 6,000) / 120,000 miles
= $0.30
Depreciation at the end of first year = 24,000 miles x $0.30 = $7,200
Answer: d. $7,200
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