Question

Required information The following information applies to the questions displayed below) Speedy Delivery Company purchases a delivery van for $34,400. Speedy estimates that at the end of its four-year service life, the van will be worth $5,600. During the four year period, the company expects to drive the van 144,000 miles Actual miles driven each year were 38,000 miles in year 1 and 42,000 miles in year 2 Required: Calculate annual depreciation for the first two years of the van using each of the following methods. (Do not round your intermediate calculations.) 1. Straight-line Year Annual Depreciation

Answer 1

	1	Straight line
		(34,400-5,600)/4
		7200
		Year	Annual depreciation
		1	7200
		2	7200
	2	Double-Declining Balance
		1/4*2
		50%
		Year	Annual depreciation
		1	17200
		2	8600
	3	Activity-based
		(34400-5600)/144000
		0.2
		Year	Annual depreciation
		1	7600
		2	8400