Quick-as-Lightning, a delivery service, purchased a new delivery truck for $45,000 on January 1, 2011. The truck

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Quick-as-Lightning, a delivery service, purchased a new delivery truck for $45,000 on January 1, 2011. The truck is expected to have a useful life of ten years or 150,000 miles and an expected residual value of $3,000. The truck was driven 15,000 miles in 2011 and 13,000 miles in 2012.

Required:
1. Compute depreciation expense for 2011 and 2012 using the (a) straight-line method, (b) double-declining-balance method, and (c) units-of-production method.
2. For each method, what is the book value of the machine at the end 2011? At the end of 2012?
3. If Quick-as-Lightning used an 8 year useful life or 100,000 miles and a residual value of $1,000, what would be the effect on (a) depreciation expense and (b) book value under each of the depreciation methods?
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Related Book For  book-img-for-question

Cornerstones of Financial and Managerial Accounting

ISBN: 978-1111879044

2nd edition

Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen

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