Paul Hauling has a fleet of 10 large trucks that cost a total of $1,410,000.The fleet is expected to provide 1,000,000 miles of transportation during an estimated 10-year life,and be sold for 10% of the original cost at the end of that time.If the fleet traveled 125,000 miles in the current twelve-month period,what would be the depreciation expense under the straight-line (SL)and units-of-production (U-of-P)methods?
A)SL = $158,625 and U-of-P = $141,000.
B)SL = $141,000 and U-of-P = $158,625.
C)SL = $126,900 and U-of-P = $176,250.
D)SL = $126,900 and U-of-P = $158,625.

Question

Quizplus · Accepted Answer

The straight-line method calculates depreciation as (Cost - Salvage Value) / Useful Life. The units-of-production method calculates depreciation as (Cost - Salvage Value) / Total Estimated Miles * Miles Driven.

Paul Hauling Has a Fleet of 10 Large Trucks That