Lima Pizza bought a used Toyota delivery van on January 2, 2021, for $18,600. The van was

Question:

Lima Pizza bought a used Toyota delivery van on January 2, 2021, for $18,600. The van was expected to remain in service for four years (57,000 miles). At the end of its useful life, Lima management estimated that the van’s residual value would be $1,500. The van traveled 20,500 miles the first year, 16,000 miles the second year, 15,400 miles the third year, and 5,100 miles in the fourth year. 


Requirements 

1. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods discussed in this chapter. (For units-of-production and double-declining balance methods, round to the nearest two decimal places after each step of the calculation.)

2. Which method best tracks the wear and tear on the van? 

3. Which method would Lima prefer to use for income tax purposes? Explain your reasoning in detail.

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Financial Accounting

ISBN: 9780136899037

13th Edition

Authors: C. William Thomas, Wendy M Tietz

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