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Calculating Units-of-Production Depreciation
Swift Trucking Company purchased a long-haul tractor-trailer for $600,000 at the beginning of the year. The expected useful life of the tractor-trailer rig was 8 years or 500,000 miles. Salvage value was estimated to be $80,000. During the first 5 years of use, the rig logged the following usage in miles:
Year 180,000miles
Year 275,000miles
Year 380,000miles
Year 476,000miles
Year 560,000miles
Total371,000miles
Calculate the depreciation expense to be taken on the tractor-trailer for each year using:
(a) Units-of-production method
(b) Straight-line method
Which method gives you higher total depreciation charges over the five-year period?
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Calculating Units-of-Production Depreciation
Swift Trucking Company purchased a long-haul tractor-...
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