Question

Dinkins company purchased a truck that cost $46,000. the company expected to drive the truck 100,000 miles over its 5-year useful life, and the truck had an estimated salvage value of $8,000. if the truck is driven 26,000 miles in the current accounting period, what would be the amount of depreciation expense for the year?

Answer 1

Cost of truck = $46,000
Life = 100,000 miles or 5 years
Salvage value = $8,000

Salvage value per mile = (46,000-8,000)/100,000 = $0.38/mile

For the current 26,000 miles covered,
Depreciation expense = 0.38*26,000 = $9,880