Depreciation by Units-of-Output Method Prior to adjustment at the end of the yea

Question

Depreciation by Units-of-Output Method

Prior to adjustment at the end of the year, the balance in Trucks is $245,400 and the balance in Accumulated Depreciation—Trucks is $27,118. Details of the subsidiary ledger are as follows:

a. Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year. Round the rate per mile to two decimal places and credit to accumulated depreciation to the nearest dollar.

Truck
No. Cost Estimated
Residual
Value Estimated
Useful
Life
(in miles) Accumulated
Depreciation
at Beginning
of Year Miles
Operated
During
Year 1 $49,300 6,400 130,000 - 20,000 2 74,800 9,800 260,000 $618 21,000 3 40,800 3,400 170,000 8,600 31,000 4 80,500 11,700 160,000 17,900 32,000

Explanation / Answer

The following is the calculation of depreciation per mile and amount to be credited to accumulated depreciation section of each of the subsidiary accounts:

depreciation per mile = (cost - estimated residual value) / estimated useful life in miles

credit to accumulated depreciation = miles operated during the year * depreciation per mile.

Truck Depreciation per mile accumulated depreciation credit 1 ($49,300 - 6,400) / 130,000 =>$0.33 $6,600 2 (74,800 - 9,800) / 260,000 =>$0.25 $5,250 3 (40,800-3400) / 170,000 =>$0.22 $6,820 4 (80,500 - 11,700) / 160,000=>$0.43 $13,760

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