Question :

Dasher Company acquired a truck for use in its business for $25,500 in a cash transaction. The truck is expected to be used over a five year period, will be driven around 18,000 miles per year, and is expected to have a value at the end of the year of $4,500.

a. Evaluate the amount of depreciation that can be taken in the first two years of the truck's useful life if the actual miles driven are 16,000 and 18,200, correspondingly.

b. How does the amount of built up depreciation at the end of the second year compare with what it could have been had the company chosen the straight-line depreciation method?