Question

A truck acquired at a cost of $290,000 has an estimated residual value of $18,600, has an estimated useful life of 46,000 miles, and was driven 4,100 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places.

Answer 1

a.
Calculate depreciable costs of truck
Depreciable costs	Costs - Residual value
Depreciable costs	290000 - 18600
Depreciable costs	271400
Thus, depreciable costs is $271,400
b.
Calculate depreciation rate per hour
Depreciation rate per mile	Depreciable costs/Estimated useful life
Depreciation rate per mile	271,400/46000
Depreciation rate per mile	5.90
Thus, depreciation rate per mile is $5.90
c.
Depreciation expense	5.90*4100
Depreciation expense	24190
Thus, depreciation expense for the year is $24,190