Respuesta :
Kwik taxi service uses the units-of-activity method in computing depreciation on its taxicabs. The depreciation for each year is $ 0.18 per mile, $ 5, 760.00 and $ 5,940.00
Calculating the problem:
The unit of the depreciation method calculates the deprecation of an asset per usage
Buying price $ 27,500
salvage value: $ 500
Expected usage: 150,000 miles
Depreciation cost =(Original Value − Salvage Value)/Estimated Production Capability
Depreciable amount: = $ 27,500- $ 500
= $27,000
Depreciation cost= $27,000/150,000
= $ 0.18 per mile
What is depreciation expense?
Depreciation expense is the value of an asset less all accumulated depreciation that has been recognized on that asset. In a broader economic sense, depreciation expense is the total amount of capital "used up" over a period of time, such as a financial year.
Why is depreciation not an expense?
The reason for this is that cash was spent on the acquisition of the underlying asset; It is no longer necessary to spend money as part of the depreciation process, unless it is spent on upgrading the property. Thus, depreciation is a non-monetary component of operating costs.
Learn more about depreciation cost:
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