Calculating Units-of-Production Depreciation Swift Trucking Company purchased a
ID: 2489081 • Letter: C
Question
Calculating Units-of-Production Depreciation Swift Trucking Company purchased a long-haul tractor-trailer for $400,000 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 $40,000. During the first 5 years of use, the rig logged the following usage in miles: Year 1 80,000 miles Year 2 75,000 miles Year 3 80,000 miles Year 4 76,000 miles Year 5 60,000 miles Total 371,000 miles Units of Production depreciation Depreciation Expense Accumulated Depreciation Net Book Value (Cost of Asset less Accum. Dep) Calculate the depreciable base and multiply that by your % of usage to total estimated usage 2012 2013 2014 2015 2016 Calculating Units-of-Production Depreciation Swift Trucking Company purchased a long-haul tractor-trailer for $400,000 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 $40,000. During the first 5 years of use, the rig logged the following usage in miles: Year 1 80,000 miles Year 2 75,000 miles Year 3 80,000 miles Year 4 76,000 miles Year 5 60,000 miles Total 371,000 miles Units of Production depreciation Depreciation Expense Accumulated Depreciation Net Book Value (Cost of Asset less Accum. Dep) Calculate the depreciable base and multiply that by your % of usage to total estimated usage 2012 2013 2014 2015 2016Explanation / Answer
Depreciation expenses per mile = $400,000 /500,000 miles
=$0.80 per mile
Calculating Units-of-Production Depreciation:
Year
Units of Production
depreciation
Depreciation
expenses
Accumulated
Depreciation
Net Book Value
(Cost of Asset less Accum. Dep)
Estimated
usage (%)
2012
80,000
$ 64,000
$ 64,000
$ 336,000
0.16
2013
75,000
$ 60,000
$ 124,000
$ 276,000
0.15
2014
80,000
$ 64,000
$ 188,000
$ 212,000
0.16
2015
76,000
$ 60,800
$ 248,800
$ 151,200
0.15
2016
60,000
$ 48,000
$ 296,800
$ 103,200
0.12
Year
Units of Production
depreciation
Depreciation
expenses
Accumulated
Depreciation
Net Book Value
(Cost of Asset less Accum. Dep)
Estimated
usage (%)
2012
80,000
$ 64,000
$ 64,000
$ 336,000
0.16
2013
75,000
$ 60,000
$ 124,000
$ 276,000
0.15
2014
80,000
$ 64,000
$ 188,000
$ 212,000
0.16
2015
76,000
$ 60,800
$ 248,800
$ 151,200
0.15
2016
60,000
$ 48,000
$ 296,800
$ 103,200
0.12
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