I need some help with this question… It is confusing me… I have parts of it done but would like someone to help explain it to me.

A truck was purchased on January 2 at a cost of $60,000. It’s expected to be used for five years and to have a residual value of $5,000 after 120,000 miles of service. The truck was driven for 23,000 miles the first year and 25,000 miles the second year. Calculate the depreciation expenses to the nearest dollar for the first and second years….
I have calculated the Straight-Line year one is 11,808 and year 2 is 11,792 I am having problems calculating the Units of Production because I know the equation is cost-residual value over estimated useful life in units… I just don’t understand what I put where.
Also I have to calculate the Double-Declining Balance I know the equation is 1 over the estimated useful life in years multiplied by 2 multiplied by the book value… what is the book value?

Please help!

To calculate the depreciation expense using the Units of Production method, you need to follow these steps:

1. Calculate the total miles driven in the first and second year:
- First year: 23,000 miles
- Second year: 25,000 miles

2. Calculate the expected total miles driven for the truck's useful life:
- Initial mileage: 0 miles
- Residual mileage: 120,000 miles
- Total expected mileage: 120,000 miles - 0 miles = 120,000 miles

3. Calculate the depreciation per mile:
- Depreciation per mile = (Cost - Residual Value) / Total expected mileage
- Depreciation per mile = ($60,000 - $5,000) / 120,000 miles
- Depreciation per mile = $55,000 / 120,000 miles
- Depreciation per mile ≈ $0.458 (rounded to the nearest penny)

4. Calculate the depreciation expense for each year using the miles driven:
- First year depreciation expense = Depreciation per mile * Miles driven in the first year
- First year depreciation expense ≈ $0.458 * 23,000 miles
- First year depreciation expense ≈ $10,534 (rounded to the nearest dollar)

- Second year depreciation expense = Depreciation per mile * Miles driven in the second year
- Second year depreciation expense ≈ $0.458 * 25,000 miles
- Second year depreciation expense ≈ $11,455 (rounded to the nearest dollar)

Now, let's move on to calculating the depreciation expense using the Double-Declining Balance method.

In this method, the book value is the net value of the asset at the start of the year. To calculate the book value, use this formula:

Book value = Cost - Accumulated depreciation

Let's calculate the depreciation expense for each year using this method:

1. Calculate the depreciation rate:
- Depreciation rate = 1 / Expected useful life
- Depreciation rate = 1 / 5
- Depreciation rate = 0.2 or 20%

2. Calculate the first-year depreciation expense:
- First-year depreciation expense = Book value * Depreciation rate
- Book value = Cost - Accumulated depreciation (At the start of the year, this is $0)
- First-year depreciation expense = ($60,000 - $0) * 0.2
- First-year depreciation expense = $12,000

3. Calculate the second-year depreciation expense:
- Second-year depreciation expense = Book value * Depreciation rate
- Book value = Cost - Accumulated depreciation (After the first year, this is $12,000)
- Second-year depreciation expense = ($60,000 - $12,000) * 0.2
- Second-year depreciation expense = $9,600

Hence, the depreciation expense for the first year is $10,534 using the Units of Production method and $12,000 using the Double-Declining Balance method. The depreciation expense for the second year is $11,455 using the Units of Production method and $9,600 using the Double-Declining Balance method.