Question
A trucking company purchases a delivery truck for
₹12,00,000. It expects the truck to deliver 3,00,000 km over its life and have a salvage value of ₹1,20,000. In its first year, the truck travels 60,000 km. Compute the depreciation expense for the first year using the Units of Production method.Solution
• Dep per km = (12,00,000 – 1,20,000) ÷ 3,00,000 = ₹3.60. • Expense = 60,000 × 3.60 = ₹2,16,000.
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