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11 February, 07:54

Coronado Industries purchased a truck at the beginning of 2017 for $108800. The truck is estimated to have a salvage value of $3000 and a useful life of 132250 miles. It was driven 18000 miles in 2017 and 26000 miles in 2018. What is the depreciation expense for 2017?

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  1. 11 February, 10:31
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    The depreciation expense for 2017 is $14,400

    Explanation:

    Coronado Industries uses the units-of-production depreciation method to calculate Coronado Industries by the following formula:

    Depreciation Expense = [ (Cost of asset - Residual Value) x Number of Units Produced]/Life in Number of Units

    In the company,

    Depreciation Expense per mile = ($108,800-$3,000) / 132,250 = $0.8

    The truck was 18000 miles in 2017, so the depreciation expense for 2017:

    18,000 x $0.8 = $14,400
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Home » Business » Coronado Industries purchased a truck at the beginning of 2017 for $108800. The truck is estimated to have a salvage value of $3000 and a useful life of 132250 miles. It was driven 18000 miles in 2017 and 26000 miles in 2018.
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