Bonita Trucking should record a depreciation expense of $14,470 for the first year.
To calculate the depreciation expense for the first year, we will use the units-of-activity method.
Depreciation per mile = (Cost - Salvage Value) / Total miles of useful life
= (169,200 - $24,500) / 1,000,000 miles
= 144,700 / 1,000,000 miles
= 0.1447 per mile
It was given that truck was driven 100,000 miles. So, the depreciation expense for the first year which will be recorded is:
= Depreciation per mile * Miles driven in the first year
= 0.1447 per mile* 100,000 miles
= $14,470
Therefore, the Option C is correct.
Full question:
Bonita Trucking purchased a tractor trailer for $169200. Interline uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1000000 miles over its 12-year useful life. Salvage value is estimated to be $24500. If the truck is driven 100000 miles in its first year, how much depreciation expense should Bonita record? $13490 $15532 $14470 O $16920