Question

A company purchased a delivery van on January 1, 2016, for $18,600. The van was estimated to have a useful service life of four years (57,000 miles) and residual value of $1,500. The van was driven 20,500 miles the first year, 16,000 miles the second year, 15,400 miles the third year, and 5,100 miles the fourth year. Determine depreciation expense for each year using the three depreciation methods below. (Round all of the final answers you input to the nearest whole dollar. Note: for the units-of-production method computations, take the per unit amount to two decimal places. If there is no depreciation for a given year, enter "0" in the appropriate box.) Units-of- Double-Declining- Year Straight-Line Production Balance 2016 - 2017 2018 2019 Total

Answer 1

Straight-Line Method year | 2016 S 2017 S 2018 S 2019 s Total $ Units of Production 4,275$ 4.275 4,275 $ 4.275 S 17,100 $ Double Declining Balance Method 6,150 $ 9,300 4.800S 4.650 4.620 S 2,325 1,530S 17.100 $ 17.100 825 Working Notes: straight Line method Delivery van cost = $18.600 Residual Value = $1,500 Useful Life = 4 Years Depreciation (Asset Cost -Salvage Value)/Useful Life Depreciation = ($18.600-$1,500)/4 = $4,275

Units of production Depreciabe Cost = Cost of asset - Residual Value = $18.600-$1.500 = $17,100 Depreciation rate per mile = $17,100/57,000 = $0.3 Depreciation for 2016 = 20,500*$0.3 = $6.150 Depreciation for 2017 = 16,000*$0.3 = $4.800 Depreciation for 2018 = 15,400*$0.3 = $4,620 Depreciation for 2019 = 5,100*50.3 = $1,530 Double Decling balance method Delivery van cost = $18,600 Residual Value = $1,500 Useful Life = 4 Years Double decling Sepreciation rate = 1/4*100*2 = 50% Depreciation for 2016 = $18.600*50% = $9,300 Depreciation for 2017 = ($18.600-$9,300)*50% =$4,650 Depreciation for 2018 = ($18.600-$9,300-$4,650)*50% = $2.325 Depreciation for 2019 = ($18.600-$9,300-$4.650-$2,325)*50% = $1,163 or $825 whichever is less