During 2012 and 2013, Supplies, Inc. drove the truck 15,000 and 22,000 miles, re

Question

During 2012 and 2013, Supplies, Inc. drove the truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. The company originally purchased the truck at the beginning of 2012 for $175,000. If the truck has an estimated life of 10 years and 300,000 miles, with an estimated residual value of $25,000, what amount of deprecation expense should Supplies, Inc. record in 2013 using the activity method?

a. $11,000. <---i am getting this, can you help me. please explain how you got it.

b. $18,500.

c. $7,500.

d. $16,000.

Explanation / Answer

Depreciation using activity: (175,000 - 25,000)/300,000 miles = $0.50 per mile depreciation expense for 2013: 22,000 miles * $0.50 per mile = $11,000 Answr: A, $11,000

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