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12 December, 10:13

On January 1, 2020, Snitchy Company purchased a tractor-trailer rig for $188,000.

The vehicle is expected to have a 8-year useful life, and a salvage value of $28,000 at the end of its useful life.

In mileage, the rig has an expected life of 352,000 miles.

The rig was driven 44,500 miles in 2020 and 41,840 miles in 2021.

Using the above data, determine depreciation expense for the years 2020 and 2021 under each of the following methods: (6 answers in all)

a) Straight-Line

b) Units-of-Production

c) Declining balance at twice the straight-line rate (Double-Declining Balance)

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Answers (1)
  1. 12 December, 10:43
    0
    Answer:a

    Explanation:

    Cost of Trailer - $188,000

    Salvage value $28,000

    Useful life: 8 years

    Depreciable amount - $160,000

    Expected miles coverage - 352,000

    Mileage in 2020 = 44,500

    Mileage in 2021 = 41480

    Depreciation rate = 1/8*100 = 12.5%

    Straight line:

    160,000/8 = 20,000 2020 2021

    20000 20000

    Units of production (44500/352000*160000) (41480/352000*160000)

    20,227.27 18,854.54

    Double declining 25%*188000 25%*141000

    balance 47000 35250
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