Question

On January 1, 2018, the Excel Delivery Company purchased a delivery van for $123,000. At the end of its five-year service life, it is estimated that the van will be worth $12,600. During the five-year period, the company expects to drive the van 368,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. 1. Straight line. 2. Sum-of-the-years'-digits. 3. Double-declining balance. 4. Units of production using miles driven as a measure of output, and the following actual mileage: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate annual depreciation for the five-year life of the van using straight line method Straight-line per year Required Required 2

Answer 1

1 computation of depreciation using Straight line method a Depreciation = cost of asset -salvage value Usefeel life $123000 - $12600 5 gears 3 $ 22080 1. straight line $22080 per year! 2) using sum-of-years digits Depreciable asset = cost of asset -salvage Valur _ =$123000 - $12600 = $ 10400 Sum of years = 1+ 2+3 +4 +5 year Gshop - competation $110400x5/15 $ 110400x 4/15 $110400x3115 $ 110400 x 2115 & 110400 x 115 depreciation 1 $36800 2 qeyo 22080 14720 7360 $ llouoo

3 using double-declining method Depreciation rate a 1 x 2 x 100 = you year original | Depreciation Deprecication Net cost I rate I Book value $ 123000 201 $ 49200 $ 73800 2 73800 404. 29520 44280 4280 yol. 17712 L 26568 26568 4o L. 10627 15941 15qul 21 3Bul 12600 U u Osing units of production method Depreciation permile = cast of asset-salvage value estimated miles 123000 - & 12600 268000 miles = $07 pex w (e

Depreciation 2018 year miles depreciation permale 48000 58. 2019 58000 $03 12020 ugooo $ 0.3 2021 88000 40.3 2022 32000 &0.3 ... $14400 Slauoo & luuoo $ (1600 & 9600.