Question
On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $87,000. The cab has an expected salvage value of $4,000.
On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $87,000. The cab has an expected salvage value of $4,000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 69,000 miles the first year and 71,000 the second year. What would be the depreciation expense reported on the Year 2 income statement and the book value of the taxi, respectively, at the end of Year 2?
A)$29,945 and $27,970
B)$29,945 and $25,970
C)$29,465 and $28,900
D)$29,465 and $26,900
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started