On February 1, 2011, Delta Distribution Company Purchased a Delivery

question 164

Essay

On February 1, 2011, Delta Distribution Company purchased a delivery truck that cost $30,000. The truck has an estimated useful life of 150,000 miles and an estimated salvage value of $3,000. The truck is driven 10,000; 34,000; and 28,000 miles for the years 2011, 2012, and 2013, respectively.
Required:
1. Calculate the depreciation expense per mile using the activity (units-of-production) method.
2. Use the activity method to complete the chart below:
3.Explain why long-term assets must be depreciated,rather than recorded as expenses in the period when the asset is purchased.
4.Explain why land is NOT depreciated when other assets,such as trucks,are depreciated.

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