Question

When calculating the depreciation for the truck, there is a $7,500 salvage value. You will need to depreciate at 40 cents per mile.

You purchased a building, equipment and a truck for $700,000 cash. The building has an

appraisal value of $400,000, the equipment $300,000 and a truck appraised at $100,000

It is planned that the delivery truck will be driven
200,000miles during its life time of 5 years. Mileage
is as follows:
Year 1: 65,000 miles, Year 2: 79,500 miles, Year 3: 45,325
Year 4: 9,690 miles, Year 5: 8,650 miles.
Calculate depreciation and book value.
	Depreciation		Book-Value
Year 1
Year 2
Year 3
Year 4
Year 5

Answer 1

Purchase cost of truck	700000*(100000/800000)
Purchase cost of truck	$87,500
Depreciation per mile	(87500-7500)/200000
Depreciation per mile	$0.40	per mile
Calculation of depreciation and book value is shown below
Year	Depreciation		Book value
1	$26,000	0.40*65000	$61,500	87500-26000
2	$31,800	0.40*79500	$29,700	61500-31800
3	$18,130	0.40*45325	$11,570	29700-18130
4	$3,876	0.40*9690	$7,694	11570-3876
5	$194	7694-7500	$7,500	7694-194