A Company Uses the Units-Of-Output Method of Computing Depreciation on Its

question 76

Essay

A company uses the units-of-output method of computing depreciation on its fleet of cars.A car that costs $37,000 is expected to have a useful life of 120,000 miles and an expected salvage value of $1,000 at the end of its useful life.The rate for each mile is ___________________.

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Definitions:

Straight-line Amortization

A method of reducing the carrying amount of an intangible asset over a fixed period of time in a systematic and rational manner.

Premium Amortization

The gradual expense or reduction of the premium paid above the par value of a debt security over its remaining term.

Interest Expense

The charge an entity bears for the funds it has borrowed over a set period.

Market Rate

The current price at which an asset or service can be bought or sold in a particular market.