On January 1, 2019, Company purchased a new truck for $29,400. Its estimated useful life is seven years or 200,000 miles. The truck's expected salvage value is $1,400. During 2019, the truck was driven 20,000 miles. Assuming units-of-production depreciation, 2019 depreciation expense is: A. $2,940
B. $4,200
C, $2,800
D. $4,000

$2,800

Explanation:

A company purchased a new truck at the price of $29,400 on January 1, 2019.

The estimated useful life of truck is 200,000 miles.

The salvage value is $1,400

The truck was driven for 20,000 miles in 2019

Therefore, assuming the units-of-production depreciation, 2019 depreciation expense can be calculated as follows

= (price of truck-salvage value/estimated useful life) × number of miles driven by the truck

= ($29,400-$1,400/200,000) × 20,000

= ($28,000/200,000) × 20,000

= 0.14×20,000

= $2,800

Hence the depreciation expense for the year 2019 is $2,800

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