Travel Trucking Company uses the units-of-production (UOP) depreciation method because UOP best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company’s fleet.
When acquired in 2010, the rig cost \($380,000\) and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was \($100,000\). The truck was driven 79,000 miles in 2010, 119,000 miles in 2011, and 159,000 miles in 2012. After 38,000 miles in 2013, the company traded in the Mack truck for a less- expensive Freightliner. Travel also paid cash of $27,000.
Requirement
1. Determine Travel’s cost of the new truck. Journal entries are not required.