Waterway corporation purchased a truck at the beginning of 2020 for $59,500. the truck is estimated to have a salvage value of $2,380 and a useful life of 190,400 miles. it was driven 27,370 miles in 2020 and 36,890 miles in 2021. compute depreciation expense using the units-of-production method for 2020 and 2021.

a. depreciation expense for 2020
b. depreciation expense for 2021

In 2020: $ 8,211 and in 2021: $ $11,067

Explanation:

In the units-of-production method, the cost of depreciation is dependent of the asset usage. Depreciation is spread across the units produced.

for waterway corporation:

Cost price = $59,500

salvage value $2,380

useful life 190, 000 miles

Depreciable value: Cost price- salvage value

   =59,500-2380

   =57,120

Depreciation per unit= Depricable cost / by expected mileage

         =  $57,120/190,000

     =$0.30 per unit

Depreciation in 2020: usages x depreciation rate

     =27,370 x 0.30

     =$8,211

Depreciation in 2021: 36,890 x0.30

     =In the units-of-production method, the cost of depreciation is dependant of the asset usage. Depreciation is spread across the units produced.

for waterway corporation:

Cost price = $59,500

salvage value $2,380

useful life 190, 000 miles

Depreciable value: Cost price- salvage value

   =59,500-2380

   =57,120

Depreciation per unit= depricable cost / by expected mileage

         =  $57,120/190,000

     =$0.30 per unit

Depreciation in 2020: usages x depreciation rate

     =27,370 x 0.30

     =$8,211

Depreciation in 2021: 36,890 x0.30

     =$11,067

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