During the first two years, supplies, inc. drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. the company originally purchased the truck for $175,000. if the truck has an estimated life of 10 years or 300,000 miles, and an estimated residual value of $25,000, what amount of depreciation expense should supplies, inc. record in the second year using the activity-based method?

$11,000

Explanation:

The computation of the depreciation expense for the second year is shown below:

For this computation, first we have to determine depreciation rate per mile which is presented below:

= (Original cost - residual value) ÷ (estimated miles)  

= ($175,000 - $25,000) ÷ ($300,000 miles)

= ($150,000) ÷ ($300,000 miles)  

= $0.5 per miles

Now for the second year, it would be  

= Production units in second year × depreciation per miles

= 22,000 miles × $0.5

= $11,000

tell me the question and i will be able to answer : )