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On January 1,2013,a Company Buys a Truck for $42,000 Cash

question 57

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On January 1,2013,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 4 years,or 200,000 miles.Assume the company uses units-of-production depreciation.The truck drove 40,000 miles in 2013,60,000 miles in 2014,80,000 miles in 2015,and 20,000 miles in 2016.What is the depreciation rate?


Definitions:

Expired Cost

A cost that has been incurred and recognized as an expense, reflecting the consumption of an asset or a service in generating revenue.

Monetary Unit Assumption

An assumption that requires that only those things that can be expressed in money are included in the accounting records.

Asset Prepayments

Payments made in advance for goods or services, recorded as assets on the balance sheet until used or expired.

Time Period Assumption

An accounting principle that allows the business operations to be divided into specific time periods for reporting purposes, such as months or years.

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