Depreciation methods (Learning Objective 3) 10–15 min.

At the beginning of the year, Titan Trucking purchased a used Kenworth truck at a cost of $48,000. Titan Trucking expects the truck to remain useful for four years (800,000 miles) and to have a residual value of $8,000. Titan Trucking expects the truck to be driven 160,000 miles the first year and 280,000 miles the second year.

Requirements 1. Compute Titan Trucking’s first-year depreciation expense on the truck using the following methods:

a. Straight-line

b. Units-of-production

c. Double-declining-balance 2. Show the truck’s book value at the end of the first year under the straight-line method.

AppendixLO1