Sheffield Corp. purchased a truck at the beginning of 2017 for $109200. The truck is estimated to have a salvage value of $3800 and a useful life of 131750 miles. It was driven 24000 miles in 2017 and 32000 miles in 2018. What is the depreciation expense for 2017?

Depreciation expense for 2017 = $19,200

Explanation:

We know,

Using the units of production depreciation method, depreciation expense per mile = (Total cost - salvage value) ÷ Total miles driven in useful life

Given,

Purchase cost = $109,200

Salvage value = $3,800

Total miles driven in useful life = 131,750 miles

Miles driven in 2017 = 24,000 miles

Therefore,

depreciation expense per mile = ($109,200 - $3,800) ÷ 131,750 miles

depreciation expense = $0.8 per mile

Hence, depreciation expense for 2017 = $0.8 per mile × 24,000 miles

depreciation expense for 2017 = $19,200

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