Question

A truck costs $9,000 with a residual value of $1,000. the truck is expected to have a useful life of 40,000 miles. By assuming the truck is driven 10,000 miles the first year, the depreciation expense would be:

Answer 1

$2,000

Step-by-step explanation:

Cost of truck = $9,000

Residual value = $1,000

Value to be depreciated = $9,000 - $1,000

= $8,000

if the truck has a useful life of 40,000 miles and 10,000 miles is covered in the first year,

Depreciation expense for the first year = (10000/40000) × $8,000

= $2,000