On January 1, 2016, the Excel Delivery Company purchased a delivery van for $43,

Question

On January 1, 2016, the Excel Delivery Company purchased a delivery van for $43,000. At the end of its five-year service life, it is estimated that the van will be worth $4,000. During the five-year period, the company expects to drive the van 150,000 miles.

Calculate annual depreciation for the five-year life of the van using each of the following methods. (Do not round intermediate calculations.)

1. Straight-line

2. Sum-of-the-years’ digits

Double-declining balance.

Units of production using miles driven as a measure of output, and the following actual mileage:

On January 1, 2016, the Excel Delivery Company purchased a delivery van for $43,000. At the end of its five-year service life, it is estimated that the van will be worth $4,000. During the five-year period, the company expects to drive the van 150,000 miles.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Cost of delivery Van                 43,000.00 Salvage Value                   4,000.00 Life in years                            5.00 1) Straight Line method = (43000 - 4000)/5                   7,800.00 2) Sum of years digits Method Life in years                            5.00 Cost of Asset                 43,000.00 Salavge Value                   4,000.00 Depreciable Value =                   39,000.00 sum of the years' digits depreciation calculation is = n(n+1)/2 = 5(5+1)/2 = 5*6/2 = 30/2 = 15 Year Depreciation WN                                                                          2,016.00                 13,000.00 39000/15*5                                                                          2,017.00                 10,400.00 39000/15*4                                                                          2,018.00                   7,800.00 39000/15*3                                                                          2,019.00                   5,200.00 39000/15*2                                                                          2,020.00                   2,600.00 39000/15*1                 39,000.00 Life   5 Years Double decling balance method rate = 20%*2 40% Particulars 2016 2017 2018 2019 2020 Opening Balance                 43,000.00            25,800.00            15,480.00              9,288.00              5,572.80 Depreciation at 40%                 17,200.00            10,320.00              6,192.00              3,715.20              1,572.80 Closing balance                 25,800.00            15,480.00              9,288.00              5,572.80              4,000.00 3) Depreciation per mile = (43000 - 4000)/150,000                            0.26 Year Miles Depreciation                                                                          2,016.00                 32,000.00              8,320.00                                                                          2,017.00                 34,000.00              8,840.00                                                                          2,018.00                 25,000.00              6,500.00                                                                          2,019.00                 30,000.00              7,800.00                                                                          2,020.00                 31,000.00              7,540.00 Total            39,000.00

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.