Question

Depreciation for Partial Periods Malone Delivery Company purchased a new delivery truck for $36,000 on April 1, 2019. The truck is expected to have a service life of 5 years or 90,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 20,000 miles in 2020. Malone computes depreciation expense to the nearest whole month. Required: 1. Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) a. Straight-line method 4,950 V 2019 6,600 V 2$ 2020 b. Sum-of-the-years'-digits method 8,250 V 2019 9,350 V 2020 c. Double-declining-balance method 14,400 X 2019 8,640 x 2020 d. Activity method 2,933 х 2019 7,334 X 2020

Answer 1

Part 1

c.	Double declining method
2019	$10800
2020	$10080
d.	Activity method
2019	$2960
2020	$7400

Part 2

c.	Double declining method
2019	$25200
2020	$15120
d.	Activity method
2019	$33040
2020	$25640

Part 1 C

Double declining method

Depreciation rate = 1/ estimated life * 2 = 1/5 * 2 = 40%

Depreciation 2019 = 36000*40%*9/12 = 10800

Depreciation 2020 = (36000-10800)*40% = 10080

Part 1 D

Activity method

Depreciation rate = (cost – residual value)/estimated activity level = (36000-3000)/90000 = 0.37

Depreciation rate 2019 = 8000*0.37 = $2960

Depreciation rate 2020 = 20000*0.37 =$7400

Part 2 C

Book value 2019 = 36000-10800 = 25200

Book value 2020 = 25200-10080 = 15120

Part 2 D

Book value 2019 = 36000-2960 = 33040

Book value 2020 = 33040-7400 = 25640