burger chef acquired a delivery truck on march 1, 2024, for $26,000. the company estimates a residual value…
burger chef acquired a delivery truck on march 1, 2024, for $26,000. the company estimates a residual value of $2,000 and a six - year service life. it expects to drive the truck 80,000 miles. actual mileage was 12,000 miles in 2024 and 16,000 miles in 2025. calculate depreciation expense using the activity - based method for 2024 and 2025, assuming a december 31 year - end. (do not round intermediate calculations.)\n\n| year | depreciation expense |\n| ---- | ---- |\n| 2024 | |\n| 2025 | |
Answer
Explanation:
Step1: Calculate depreciable cost
Depreciable cost = Cost - Residual value = $26000 - 2000=$24000$
Step2: Calculate depreciation per mile
Depreciation per mile=$\frac{\text{Depreciable cost}}{\text{Total estimated miles}}=\frac{24000}{80000}=$0.3$ per mile
Step3: Calculate 2024 depreciation expense
The truck was in use from March 1 - December 31, 2024 (10 months). 2024 depreciation expense = Depreciation per mile×Actual miles in 2024×$\frac{10}{12}$ = $0.3\times12000\times\frac{10}{12}=$3000$
Step4: Calculate 2025 depreciation expense
2025 depreciation expense = Depreciation per mile×Actual miles in 2025 = $0.3\times16000=$4800$
Answer:
| Year | Depreciation Expense |
|---|---|
| 2024 | $3000 |
| 2025 | $4800 |