Question

Waterway Corporation purchased a truck at the beginning of 2020 for $59,500. The truck is estimated to have a salvage value of $2,380 and a useful life of 190,400 miles. It was driven 27,370 miles in 2020 and 36,890 miles in 2021. Compute depreciation expense using the units-of-production method for 2020 and 2021.

a. Depreciation expense for 2020 $enter a dollar amount.
b. Depreciation expense for 2021 $enter a dollar amount.

Answer 1

a. $8211

b. $11,067

Step-by-step explanation:

Depreciation expense using the units-of-production method = miles driven × [(cost of truck - Salvage value)/ total useful life]

Miles driven × [ ($59,500 -$2380) /190,400 miles]

Miles driven × 0.3

Depreciation expense in 2020 = 27,370 × 0.3 = $8211

Depreciation expense in 2021 = 36,890 × 0.3 =$11,067

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