On January 1, Year 1, Dinkins Company purchased a truck that cost $54,000. The company expected to drive the truck 100,000 miles over its 5-year useful life, and the truck had an estimated salvage value of $8,000. If the truck is driven 29,000 miles in Year 1, what would be the amount of depreciation expense for the year? (Round your intermediate calculations to 3 decimal places.)

Question

Quizplus · Accepted Answer

First, we need to calculate the depreciation per mile:

Depreciation Per Mile = (Cost - Salvage Value) / Total Mileage
Depreciation Per Mile = ($54,000 - $8,000) / 100,000
Depreciation Per Mile = $0.46 per mile

Next, we need to calculate the depreciation expense for Year 1 based on the miles driven:

Depreciation Expense = Depreciation Per Mile x Miles Driven in Year 1
Depreciation Expense = $0.46 x 29,000
Depreciation Expense = $13,340

Therefore, the amount of depreciation expense for the year is $13,340. Option B is correct.

On January 1, Year 1, Dinkins Company Purchased a Truck