Chapter 8, Problem 7SE

Depreciation methods (Learning Objective 3) 10-15 min.

On January 1, Titan Trucking purchased a used Ken worth truck at a cost of $48,000. Titan Trucking expects the truck to remain useful for four years (800,000 miles) and to have a residual value of $8,000. Titan Trucking expects the truck to be driven 160,000 miles the first year and 280,000 miles the second year.

Requirements

1. 1. Compute Titan Trucking’s first-year depreciation expense on the truck using the following methods:
   1. a. Straight-line
   2. b. Units-of-production
   3. c. Double-declining-balance
2. 2. Show the truck’s book value at the end of the first year under the straight-line method.