Transport Inc.has a fleet of 10 large trucks that cost a total of $1,410,000.The fleet is expected to be driven a total of 1,000,000 miles during its estimated 10-year life and be sold for $141,000 at the end of its useful life.If the fleet was driven 125,000 miles during the current year,what is the amount of depreciation that would be calculated using the straight-line and units-of-production methods,respectively?
A)$158,625 and $141,000
B)$141,000 and $158,625
C)$126,900 and $176,250
D)$126,900 and $158,625

Question

Quizplus · Accepted Answer

Straight-Line Method:
Depreciation expense per year = (Cost − Residual value)× (1 ÷ Useful life)
= ($1,410,000 − $141,000)× 1 / 10 = $126,900
Units-of-Production Method:
Depreciation expense = (Cost − Residual value)× (Actual production this period ÷ Estimated total production)
= ($1,410,000 − $141,000)× (125,000 units ÷ 1,000,000 units)= $158,625