Question

On January 1, 2018, the Excel Delivery Company purchased a delivery van for $57,000. At the end of its five-year service life, it is estimated that the van will be worth $5,400. During the five-year period, the company expects to drive the van 172,000 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 Required Required Required 4 Calculate annual depreciation for the five-year life of the van using units of production using miles driven as a measure of output, and the following actual mileage. (Do not round your intermediate calculations.) Show less Year Miles Depreciat 2018 37,840 2019 41,280 2020 25,800 2021 34,400 2022 36,1201 Total $ 0

Answer 1

Solution:

Requirement 4:

Calculation of Depreciation under Units of Production Method(Miles Driven):

Year	Miles	Depreciation	Calculation
2018	$              37,840.00	$              11,129.41	(57000-5400)/175,440 Miles*37840 Miles
2019	$              41,280.00	$              12,141.18	(57000-5400)/175,440 Miles*41280 Miles
2020	$              25,800.00	$                7,588.24	(57000-5400)/175,440 Miles*25800 Miles
2021	$              34,400.00	$              10,117.65	(57000-5400)/175,440 Miles*34400 Miles
2022	$              36,120.00	$              10,623.53	(57000-5400)/175,440 Miles*36120 Miles
Totals	$           175,440.00	$              51,600.00

Notes:

1) Depreciation Formula = (( Initial Cost - Salvage Value) / Total Miles ) * Miles in that particular year.