If you bought a new truck for $40,000 for your auto parts delivery service, and you estimated that the truck would last you 200,000 miles with a salvage value of $4,000, what would be your depreciation expense for the first year in which you used the truck for 12,500 miles? a

Accounting Mar 18, 2021

If you bought a new truck for $40,000 for your auto parts delivery service, and you estimated that the truck would last you 200,000 miles with a salvage value of $4,000, what would be your depreciation expense for the first year in which you used the truck for 12,500 miles?

a. $1,250

b. $2,500

c. $2,250

d. $2,000

Expert Solution

Answer:

c .

Step-by-Step explanation

The depreciation expense is calculated as follows:

Depreciation expense = [(Cost - Salvage value) / Total Estimated useful life (in miles)] ?×? Used in first year

= [($40,000 - $4,000) / 200,000 miles] ?×? 12,500 miles

= $2,250

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