Answered

Danford Trucking purchased a tractor trailer for $147,000. Danford uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1,000,000 miles over its 12-year useful life. Salvage value is estimated to be $21,000. If the truck is driven 80,000 miles in its first year, how much depreciation expense should Danford record?

Answer :

Answer:

Depreciation in first year = $10,080

Explanation:

Provided cost of tractor = $147,000

Salvage value = $21,000

Value to be Depreciated = $126,000

Provided method of depreciation = units of activity method.

Total units = 1,000,000 miles

Depreciation per mile = $126,000/1,000,000 = $0.126 per mile

Miles driven in first year = 80,000

Depreciation in first year = 80,000 [tex]\times[/tex] $0.126 = $10,080

Other Questions