Southerns Pizza bought a used Nissan delivery van on January 2, 2010, for $19,200. The van was

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Southern’s Pizza bought a used Nissan delivery van on January 2, 2010, for $19,200. The van was expected to remain in service four years (30,000 miles). At the end of its useful life, Southern’s officials estimated that the vans residual value would be $2,400. The van traveled 8,000 miles the first year, 8,500 miles the second year, 5,500 miles the third year, and 8,000 miles in the fourth year. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods. (For units-of-production and double-declining-balance, round to the nearest two decimals after each step of the calculation.) Which method best tracks the wear and tear on the van? Which method would Southern’s prefer to use for income tax purposes? Explain in detail why Southern’s prefers this method.

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Financial accounting

ISBN: 978-0136108863

8th Edition

Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas

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