Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

what is the depreciation expense in year 3?? pls help EXERCISE 3: Units of Production Method Revert back to the original assumptions for the car

what is the depreciation expense in year 3?? pls help
image text in transcribed
image text in transcribed
EXERCISE 3: Units of Production Method Revert back to the original assumptions for the car (Useful Life: 5 years, Salvage Value: $2,000 ). Luciano's estimates that the car will be driven a total of 80,000 miles over its life. Use the Units of Production method to calculate the rate per mile to be used for depreciation. Step 1: Calculate the rate per mile. miles$=$/ mile Step 2: Multiply the rate by the activity. Assume the following miles driven each year. Colnulate the voarlu danraciation exbense usina the Units of Production method. NOTE: An asset cannot be depreciated below its salvage value. So, if the estimates for use (i.e. mileage in the above example) turn out to be incorrect, you may need to adjust the calculation for the last year's depreciation amount. What if you change your estimates? After the first two years, assume that Lucianno's now believes that the expected useful life of the car is 8 years rather than 5 years. Following is the car's new "Remaining Life". Assume also that the salvage value is now expected to be $200. Determine the new annual depreciation by inserting the Net Book Value (NBV) at the end of year 2 that you calculated on the previous page. Review the completed example below: UsefulLifeNBV-Salvage=6years$9,200$200=$1,500 per year EXERCISE 3: Units of Production Method Revert back to the original assumptions for the car (Useful Life: 5 years, Salvage Value: $2,000 ). Luciano's estimates that the car will be driven a total of 80,000 miles over its life. Use the Units of Production method to calculate the rate per mile to be used for depreciation. Step 1: Calculate the rate per mile. miles$s=$/ mile Step 2: Multiply the rate by the activity. Assume the following miles driven each year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Continuity Management Audit A Complete Guide

Authors: Gerardus Blokdyk

2019 Edition

0655845860, 978-0655845867

More Books

Students also viewed these Accounting questions

Question

1. Describe the types of power that effective leaders employ

Answered: 1 week ago