Grover Corporation purchased a truck at the beginning of 2014 for $93,600. The truck is estimated to have a salvage value of $3,600 and a useful life of 120,000 miles. It was driven 21,000 miles in 2014 and 29,000 miles in 2015. What is the depreciation expense for 2015?

Question

Quizplus · Accepted Answer

To find the depreciation expense for 2015, we need to use the units-of-production method.

Total miles driven in 2014 and 2015 = 21,000 + 29,000 = 50,000
Total miles driven as a percentage of useful life = (50,000 / 120,000) x 100% = 41.67%

Depreciable cost = cost - salvage value = $93,600 - $3,600 = $90,000
Depreciation rate = depreciable cost / total units of production = $90,000 / 120,000 = $0.75 per mile
Depreciation expense for 2015 = depreciation rate x miles driven in 2015 = $0.75 x 29,000 = $21,750

Therefore, the correct choice is C.

Grover Corporation Purchased a Truck at the Beginning of 2014