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A roofing company purchased a work truck for $24,000 on 1/1
A roofing company purchased a work truck for $24,000 on 1/1. The truck is expected to have a 4 year life and last 100,000 miles with a salvage (residual) value of $6,000. The truck was driven 25,000 in year 1. If the company uses the activity based method to calculate depreciation expense, how much would the depreciation expense be for the first year of use? 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
Expert Solution
Activity based method of depreciation
Rate of depreciation = cost of assets - salvage value/useful life of assets
Rate of depreciation= 24000 - 6000 / 100000
Rate of depreciation= 0.18 per mile
Depreciation for first year = truck driven x rate of depreciation per mile
Depreciation for first year = 25000 x 0.18
Depreciation for first year = 4500
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