Speedy Delivery Company purchases a delivery van for $40,000. Speedy estimates that at the end of its
Question:
Speedy Delivery Company purchases a delivery van for $40,000. Speedy estimates that at the end of its five-year service life, the van will be worth $10,000. During the five-year period, the company expects to drive the van 100,000 miles.
Required:
Calculate annual depreciation for the four-year life of the van using each of the following methods. Round all amounts to the nearest dollar.
1. Straight-line.
2. Double-declining-balance.
3. Activity-based.
Actual miles driven each year were 23,000 miles in year 1; 17,000 miles in year 2; 19,000 miles in year 3; 22,000 miles in year 4; and 21,000 miles in year 5. Note that actual total miles of 102,000 exceed expectations by 2,000 miles.
Step by Step Answer:
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann