Question

Swifty Corporation purchased a truck at the beginning of Year 7 for $109600. The truck is estimated to have a salvage value of $4000 and a useful life of 132000 miles. It was driven 18000 miles in Year 7 and 26000 miles in Year 8. What is the depreciation expense for Year 7

Answer 1

Annual depreciation= $14,400

Step-by-step explanation:

Giving the following information:

Purchasing price= $109,600.

The truck is estimated to have a salvage value of $4000.

Useful life of 132000 miles. It was driven 18000 miles in Year 7.

To calculate the depreciation expense, we need to use the units of the production method.

Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated

In this case, miles driven:

Annual depreciation= [(109,600 - 4,000)/132,000]*18,000= $14,400