Interline Trucking purchased a tractor trailer for $84,000. Interline uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1,000,000 miles over its 12-year useful life. Salvage value is estimated to be $12,000. If the truck is driven 80,000 miles in its first year, how much depreciation expense should Interline record?

Question

Quizplus · Accepted Answer

The depreciation expense is calculated using the formula: (Cost - Salvage Value) / Total Expected Miles * Miles Driven in the Year. So, ($84,000 - $12,000) / 1,000,000 miles * 80,000 miles = $5,760.

Interline Trucking Purchased a Tractor Trailer for $84,000