Grimwood Trucking purchased a tractor trailer for $171500. 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 90000 miles in its first year how much depreciation expense should Grimwood record?

Question

Quizplus · Accepted Answer

Depreciation per mile = (cost - salvage value) / total miles = ($171,500 - $24,500) / 1,000,000 = $0.147
Depreciation expense for first year = 90000 miles x $0.147 per mile = $13,230. Therefore, the answer is (C) $13230.

Grimwood Trucking Purchased a Tractor Trailer for $171500