Xit Company bought a new delivery truck.The manufacturer says that the truck should last for ten years and 120,000 miles.Xit plans to use the truck for 4 years,during which it will be driven 50,000 miles.What is the useful life of the truck for straight-line depreciation purposes?

Question

Quizplus · Accepted Answer

The useful life for straight-line depreciation purposes is the same as the length of time that the asset will be used in the business to generate revenue. In this case, Xit plans to use the truck for only 4 years, so the useful life for straight-line depreciation purposes is also 4 years. The fact that the manufacturer says the truck should last for 10 years and 120,000 miles does not affect the straight-line method of depreciation.

Xit Company Bought a New Delivery Truck