Paul Hauling has a fleet of 10 large trucks that cost a total of $1,410,000.The fleet is expected to provide 1,000,000 miles of transportation during an estimated 10-year life,and be sold for 10% of the original cost at the end of that time.If the fleet traveled 125,000 miles in the current twelve-month period,what would be the amortization expense under the straight-line (SL)and units-of-production (UoP)methods?

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Quizplus · Accepted Answer

Under the SL method, the annual depreciation is calculated as (Cost - Salvage Value) / Useful Life = ($1,410,000 - $141,000) / 10 = $126,900. Under the UoP method, the depreciation per mile is (Cost - Salvage Value) / Total Miles = ($1,410,000 - $141,000) / 1,000,000 = $1.269 per mile. For 125,000 miles, the expense is 125,000 * $1.269 = $158,625.

Paul Hauling Has a Fleet of 10 Large Trucks That