On January 1, 2018, the Excel Delivery Company purchased a delivery van for $48,

Question

On January 1, 2018, the Excel Delivery Company purchased a delivery van for $48,000. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 150,000 miles. Required Calculate annual depreciation for the five-year life of the van using each of the following methods. 1. Straight line. 2. Sum-of-the-years'-digits 3. Double-declining balance 4. Units of production using miles driven as a measure of output, and the following actual mileage: Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required4 Calculate annual depreciation for the five-year life of the van using straight line method Straight-line per year

Explanation / Answer

1. Straight line method

Annual depritiation = 48000 - 3000 / 5 years = $9000

2. Sum of the years digit

Depritiable value of Van = 48000 - 3000 = 45000

3. Double decline balance method

Straight line method depritiation rate = 100 / 5 years = 20%

Double decline balance method depritiation rate = 2 * 20 = 40%

4. Unit of production method

Year Sum of Year's digit Depritiation 2018 5 15000 2019 4 12000 2020 3 9000 2021 2 6000 2022 1 3000 Total 15 45000

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