Jafari Corporation purchased a truck at the beginning of 2019 for $180,000. The truck is estimated to have a salvage value of $6,000 and a useful life of 240,000 miles. It was driven 36,000 miles in 2019 and 64,000 miles in 2020.
What is the book value of the truck on December 31, 2020?

Question

Quizplus · Accepted Answer

Depreciation per unit = ($180,000 - $6,000) / 240,000 = $0.725 per mile
$0.725 x (36,000 + 64,000) = $72,500
$180,000 - $72,500 = $107,500

Jafari Corporation Purchased a Truck at the Beginning of 2019