Question

Question 17 0.96/1 View Policies Show Attempt History Current Attempt in Progress Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2020, and it will be ready for use on September 1, 2020. Natalie is concerned about the impact of the van's cost on her income statement and balance sheet. She has come to you for advice on calculating the van's depreciation. Your answer is correct. Determine the cost of the van. $ Cost of the van 40500 eTextbook and Media

Answer 1

Straight-line Depreciation
Year	Depreciable costs	Depreciation expense	Accumulated Depreciation	Net book value
				40500
2020	33000	2200	2200	38300
2021	33000	6600	8800	31700
2022	33000	6600	15400	25100
Units of activity Depreciation
Year	Depreciable costs	Depreciation expense	Accumulated Depreciation	Net book value
				40500
2020	15000	2475	2475	38025
2021	45000	7425	9900	30600
2022	50000	8250	18150	22350