Question: 2 . DEPRECIATION METHODS ( UNITS - OF - OUTPUT ) During the current year, Central Auto Rentals purchased 6 0 new automobiles at a
DEPRECIATION METHODS UNITSOFOUTPUT During the current year, Central Auto Rentals purchased new automobiles at a cost of $ per car. The cars will be sold to a wholesaler at an estimated $ each as soon as they have been driven miles. Central Auto Rentals computes depreciation expense on its automobiles by the unitsofoutput method, based on mileage. a Compute the amount of depreciation to be recognized for each mile that a rental automobile is driven. b Assuming that the rental cars are driven a total of miles during the current year, compute the total amount of depreciation expense that Central Auto Rentals should recognize on this fleet of cars for the year. c In this particular situation, do you believe the unitsofoutput depreciation method achieves a better matching of expenses with revenue than would the straightline method? Explain. Commented MF: Change question. Same asin discussion
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