Paul Hauling Has a Fleet of 10 Large Trucks That

question 5

Multiple Choice

Paul Hauling has a fleet of 10 large trucks that cost a total of $1,410,000. The fleet is expected to provide 1,000,000 miles of transportation during an estimated 10-year life, and be sold for 10% of the original cost at the end of that time. If the fleet traveled 125,000 miles in the current twelve-month period, what would be the depreciation expense under the straight-line (SL) and units-of-production (U-of-P) methods?

• A) SL = $158,625 & U-of-P = $141,000
• B) SL = $141,000 & U-of-P = $158,625
• C) SL = $126,900 & U-of-P = $176,250
• D) SL = $126,900 & U-of-P = $158,625

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Definitions:

Statement of Financial Position

A financial report detailing an entity's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial status.

Impaired

A term indicating that an asset's market value has decreased significantly more than what is recorded on financial statements, suggesting that the asset may not be recoverable to its currently stated value.

Recoverable Amount

The higher value between an asset's fair value minus costs to sell and its value in use, used in assessing whether an asset is impaired.

Carrying Amount

The book value of an asset or liability on a company's balance sheet, reflecting its original cost adjusted for factors such as depreciation or amortization.