Danford Trucking purchased a tractor trailer for $147,000.Danford 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 $21,000.If the truck is driven 80,000 miles in its first year, how much depreciation expense should Danford record?

Question

Quizplus · Accepted Answer

The depreciation expense is calculated using the units-of-activity method: (Cost - Salvage Value) / Total Expected Miles * Miles Driven in Year 1 = ($147,000 - $21,000) / 1,000,000 * 80,000 = $10,080.

Danford Trucking Purchased a Tractor Trailer for $147,000