Question 9 Linton Company purchased a delivery truck for $34,000 on January 1, 2
ID: 2395527 • Letter: Q
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Question 9 Linton Company purchased a delivery truck for $34,000 on January 1, 2017. The truck has an expected salvage value of $2,600, and is expected to be driven 103,000 miles over its estimated useful life of 8 years. Actual miles driven were 16,100 in 2017 and 11,700 in 2018. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation expense per mile SHOW LIST OF ACCOUNTS Compute depreciation expense for 2017 and 2018 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, e.g. 2,125) Depreciation Expense 2018 2017 (1) Straight-line method (2) Unii% of activity meihexi (3) Declining-balance method SHOW LIST OF ACCOUNTSExplanation / Answer
Answers
Working:
A
Cost
$ 34,000.00
B
Residual Value
$ 2,600.00
C=A - B
Depreciable base
$ 31,400.00
D
Usage
103000 miles
E
Depreciation per mile
0.304854369 or $ 0.30 per mile
Answer = $ 0.3 per mile
Working for Double declining method:
A
Cost
$ 34,000.00
B
Residual Value
$ 2,600.00
C=A - B
Depreciable base
$ 31,400.00
D
Life [in years]
8
E=C/D
Annual SLM depreciation
$ 3,925.00
F=E/C
SLM Rate
12.50%
G=F x 2
DDB Rate
25.00%
Year
Beginning Book Value
Depreciation rate
Depreciation expense
Ending Book Value
Accumulated Depreciation
1
$ 34,000.00
25.00%
$ 8,500.00
$ 25,500.00
$ 8,500.00
2
$ 25,500.00
25.00%
$ 6,375.00
$ 19,125.00
$ 14,875.00
Answer, [based on Requirement 1, and working above]
Depreciation expense
2017
2018
Straight Line Method
$ 3,925.00
$ 3,925.00
Units of activity Method
$ 4,830.00
$ 3,510.00
Declining balance method
$ 8,500.00
$ 6,375.00
Working for above:
Depreciation expense
2017
2018
Straight Line Method
=+(34000-2600)/8
=+(34000-2600)/8
Units of activity Method
=16100*0.3
=11700*0.3
Declining balance method
As per DDB working in Req 2
As per DDB working in Req 2
Accounts title & Explanation
Debit
Credit
Depreciation expenses (Equipment - Truck)
$ 3,925.00
Accumulated Depreciation (Equipment - Truck)
$ 3,925.00
(depreciation recorded as per straight line method)
Partial Balance Sheet
as at 31 Dec 2017
Equipment (Truck)
$ 34,000.00
Less:
Accumulated Depreciation (Equipment - Truck)
$ 3,925.00
Equipment (Truck), NET
$ 30,075.00
A
Cost
$ 34,000.00
B
Residual Value
$ 2,600.00
C=A - B
Depreciable base
$ 31,400.00
D
Usage
103000 miles
E
Depreciation per mile
0.304854369 or $ 0.30 per mile
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