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Coronado Industries purchased a truck at the beginning of 2017 for $108800. The truck is estimated to have a salvage value of $3000 and a useful life of 132250 miles. It was driven 18000 miles in 2017 and 26000 miles in 2018. What is the depreciation expense for 2017?

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Answer:

The depreciation expense for 2017 is $14,400

Explanation:

Coronado Industries uses the units-of-production depreciation method to calculate Coronado Industries by the following formula:

Depreciation Expense = [(Cost of asset − Residual Value ) x Number of Units Produced]/Life in Number of Units

In the company,

Depreciation Expense per mile = ($108,800-$3,000)/132,250=  $0.8

The truck was 18000 miles in 2017, so the depreciation expense for 2017:

18,000 x $0.8 = $14,400

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