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On November 1, 2015 Polo company purchased a truck that has a cost of $40,000...

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Accounting

On November 1, 2015 Polo company purchased a truck that has a cost of $40,000 and a salvage value of $4,000. The truck is expected to be driven during its 6 years of useful life as follows: 2015, 15,000 miles; 2016, 15,000 miles; 2017, 20,000 miles; 2018, 30,000 miles 2019, 10,000 miles and 2020, 10,000 miles. Polo Company uses units of activity method of depreciation . 1- What is the total units of activity? a) $40,000 b) $4,000 c) $36,000 d) 100,000 miles 2- What is the depreciable cost per unit? * a) $36,000 b) $0.36 per mile c) $0.4 per mile d) $0.04 per mile 3- What is the depreciation expense for the year 2015? * a) $6,000 b) $1,000 c) $5,400 d) $900 4- What is the book value for the year 2016? * a) $34,600 b) $29,200 c) $22,000 d) $33,700 5- If the Polo Company uses the double declining balance (DDB) method, what is the annual depreciation expense for the year 2015? * a) $13,333.33 b) $1,111.11 c) $2,222.22 d) None of the above 6- If the truck was purchased on August 1, 2015, what is the depreciation expense for the year 2015 under units of activity method? * a) $5,400 b) $2,250 c) $2,700 d) $3,150

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