A company paid $17,000 for a vehicle that had an estimated useful life of 4 years,total capacity of 100,000 miles,and a residual value of $1,000.After 2 full years of using the vehicle (20,000 miles in year 1 and 27,000 miles in year 2),the company sold the vehicle for $6,000 and reported a loss on disposal of $3,480.What method of depreciation did the company use?
A)Units-of-production method.
B)Double-declining-balance method.
C)Straight-line method.
D)Units-of-production method in year 1 and straight-line in year 2.

Question

Quizplus · Accepted Answer

The company used the units-of-production method, as the depreciation was based on mileage (20,000 miles in year 1 and 27,000 miles in year 2). The loss on disposal calculation aligns with this method.

A Company Paid $17,000 for a Vehicle That Had an Estimated