Decorama Corp. bought a delivery van for $65,000 with a estimated residual value of $6,000. The...
Decorama Corp. bought a delivery van for $65,000 with a
estimated residual value of $6,000. The van is expected to be used
for the next 10 years. The company estimates it will be used to
drive a total of 225,000,000 km (30,000 km in the first year,
25,000 in the second, third and fourth years and 20,000 in the next
six years.
What would be the amount of depreciation expense in year 2 using
the units-of-production method?
Homework Answers
Depreciation expense for second year= (Original Cost-salvage value)/Estimated production*Km in second year
= (65000-6000)/225000*25000
depreciation expense for second year = 6555.55 or $6556
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Decorama Corp. bought a delivery van for $65,000 with a
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