Answer:
$11,340
Explanation:
The unit of the activity depreciation method determines the depreciation amount based on the level of usage. The method calculates the depreciation amount per unit of activity.
For Grimwood trucking, depreciation per unit.
Depreciation per unit = Cost of the asset/ expected usage
Depreciable amount = asset cost - salvage value
=$147,000 -$21,000 = $126,000
Depreciation per unit = Depreciable amount/ expected usage
=$126,000/ 1,000,000
=$0.126 per mile.
If the truck is driven for 90,000 in the first year
Amount of depreciation = $0.126 x 90,000
=$11,340