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Homework answers / question archive / Big M's BBQ purchased a truck for $47,000 on 1/1 in Year 1
Big M's BBQ purchased a truck for $47,000 on 1/1 in Year 1. The truck is expected to have a five-year life or last 100,000 miles and have a residual value of $10,000. The truck was driven as follows for year 1 & 2: • Year 1 - 14,000 miles • Year 2 - 11,000 miles If the activity based depreciation method is used, what will be the book value of the truck at the end of Year 2 on 12/31? Fill in the blank with your calculated number. DO NOT include commas, $ signs, period, decimal points, etc., just enter the raw number. Webcourses will add commas to your answer automatically. For example, if you calculated the answer to be $24,123, you would only input: 24123
Answer:
Depreciation (Activity Based)=(Original Cost-Salvage)*Used/Total Useful Life:
Depreciation (For 1st year)=(47000-10000)*14000/100000=37000*14000/100000=5180
Depreciation (For 2nd year)=(47000-10000)*11000/100000=37000*11000/100000=4070
Book Value at the end of year 2=47000-(5180+4070)=47000-9250= 37750
