Sean Power Lines purchased a truck on January 1, 2010. The truck cost $75,000 and has an estimated useful life of 5 years or 100,000 miles. The truck's estimated salvage value is $5,000. The truck was driven for 30,000 miles during 2010. Using the units-of-production method, Sean Power Lines' depreciation expense for 2010 is

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Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on usage. The formula is: (Cost - Salvage Value) / Total Estimated Miles = Depreciation per Mile. Then, multiply by miles driven. ($75,000 - $5,000) / 100,000 miles = $0.70 per mile. For 30,000 miles: 30,000 * $0.70 = $21,000.

Sean Power Lines Purchased a Truck on January 1, 2010