Question

On January 1, 2010, the Super Fast Subs Company purchased a delivery automobile for $31,000. The estimated useful life of the vehicle is five years, and the estimated salvage value is $1,000. The company expects the automobile to be driven 200,000 miles during its service life. Actual miles driven were:

Requirements
1. Calculate the depreciation expense for each year of the five-year life of the automobile using the following methods. (Round your answers to the nearest dollar.)
a. Straight-line method
b. Double-declining balance method
c. Activity method
2. How does the choice of depreciation methods affect net income in each of the years? How does the choice of depreciation methods affect the balance sheet in each of the years?



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  • CreatedSeptember 01, 2014
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