On January 1, Year 1, Friedman Company purchased a truck that cost $33,000. The truck had an expected useful life of 100,000 miles over 8 years and an $7,000 salvage value. During Year 2, Friedman drove the truck 34,000 miles. The amount of depreciation expense recognized in Year 2 assuming that Friedman uses the units-of-production method is: (Do not round intermediate calculations.)

Depreciation expense-Year 2 = $8840

Explanation:

It is important to note that the depreciation is based on the units-of-production method and in case of the truck, we take 100000 miles as its useful life or total units of production.

The depreciable value of the truck is Cost - salvage value,

Depreciable Value = 33000 - 7000 = 26000

The depreciation for year 2 based on units-of-production is,

Depreciation expense for year 2 = 26000 * 34000/100000 = $8840

$8,840

Explanation:

The unit of production method can be described as a depreciation method that is used to depreciate the value of an asset based on the expected number of units the asset the asset will produce during its useful life. It can be calculated as follows:

Depreciation expense = (Equipment original cost – Salvage value) × (Unit per year ÷ Total expected units)

From the question, the units of production is expressed as the number of miles. Given this, the depreciation expense for year 2 can be calculated as follows:

Depreciation expense for Year 2 = ($33,000 – $7,000) × (34,000 ÷ 100,000)  

                                                       = $26,000 × 0.34

Depreciation expense for Year 2 = $8,840

Therefore, the amount of depreciation expense to be recognized in Year 2 assuming that Friedman uses the units-of-production method is $8,840.