Calculating Units-of-Production Depreciation Swift Trucking Company purchased a

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 2016

Explanation / Answer

Calculation of depreciation per mile = (Cost of tractor-trailer - salve value) / Total miles = ($400000 - $40000) / 500000 miles = $0.72 per mile Years Miles running Depreciation expense Accumulated depreciation Net Book value % of usage Depreciaable base Depreciation expense A B = A * 0.72 C D = $400000 - C E = (A / 500000 miles)*100 F E * F 2012 80000 $57,600 $57,600 $3,42,400 16.00% $3,60,000 $57,600 2013 75000 $54,000 $1,11,600 $2,88,400 15.00% $3,60,000 $54,000 2014 80000 $57,600 $1,69,200 $2,30,800 16.00% $3,60,000 $57,600 2015 76000 $54,720 $2,23,920 $1,76,080 15.20% $3,60,000 $54,720 2016 60000 $43,200 $2,67,120 $1,32,880 12.00% $3,60,000 $43,200

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