Question
Little TownLittle TownPizza purchased a used Ford delivery van on January 2, 2018 for $21,800 . The van was expected to remain in service for
Little TownLittle TownPizza purchased a used Ford delivery van on January 2, 2018 for $21,800 . The van was expected to remain in service for four years for the left bracket 48 750 (48,750 miles). Little TownLittle Town management estimated that the residual value of the van at the end of its useful life would be $2,300. The van travelled 15,000 miles the first year, 17,000 miles the second year, 12,500 miles the third year and 4,250 miles the fourth year.
Requirements
1. | Prepare an annual depreciation expense schedule for the van under the three depreciation methods. (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 wear and tear on the van? |
3. | what method would Small TownSmall Town Prefer to use it for income tax purposes? Explain your rationale in detail. |
Step by Step Solution
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Step: 1
1 Annual Depreciation Expense Schedule StraightLine Method Cost of the van 21800 Residual value 2300 Useful life in years 4 Depreciable cost Cost of t...Get Instant Access with AI-Powered Solutions
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Step: 2
Step: 3
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