Question

Required information (The following information applies to the questions displayed below) On January 1, 2021, the Excel Delivery Company purchased a delivery van for $153,000. At the end of its five-year service life, it is estimated that the van will be worth $15,600. During the five-year period, the company expects to drive the van 458,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. 3. Units of production using miles driven as a measure of output, and the following actual mileage: (Do not round Intermediate calculations.) Year Answer is complete but not entirely correct. Miles Depreciation 2021 52,000 $ 15,600 2022 62,000 18,600 2023 55,000 16,500 2024 45,000 13,500 2025 48,000 14,400 Total 78,600

Answer 1

Solution:

Depreciable cost of VAN = Cost - Salvage value = $153,000 - $15,600 = $137,400

Expected life in miles = 458000 miles

Depreciation per mile = $137,400 / 458000 = $0.30 per mile

Excel delivery company - Unit of Production method
Year	Depreciation per mile	Nos of miles driver	Depreciation Expense for the year	Accumulated Depreciation
Purchase Date
2021	$0.30	52000	$15,600.00	$15,600.00
2022	$0.30	62000	$18,600.00	$34,200.00
2023	$0.30	55000	$16,500.00	$50,700.00
2024	$0.30	45000	$13,500.00	$64,200.00
2025		48000	$73,200.00	$137,400.00
Total			$137,400.00