Swifty Trucking purchased a tractor trailer for $175400. Interline uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1000000 miles over its 12-year useful life. Salvage value is estimated to be $21400. If the truck is driven 90000 miles in its first year, how much depreciation expense should Swifty record? $13860 $14922 $12880 $15786
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Swifty Trucking purchased a tractor trailer for $175400. Interline uses the units-of-activity method for
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$13860 |
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$14922 |
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$12880 |
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$15786 |
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