Speedy Delivery Company purchases a delivery van for $36,000. Speedy estimates that at the end of its four-year service life, the van will be worth $6,400. During the four-year period, the company expects to drive the van 148,000 miles.
Required:
Calculate annual depreciation for the first two years using each of the following methods. Round all amounts to the nearest dollar.
1. Straight-line.
2. Double-declining-balance.
3. Activity-based.
Actual miles driven each year were 40,000 miles in year 1 and 46,000 miles in year 2.
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Ответ:
Straight line method
Year 1. $7,400
Year 2. $7,400
Double - Declining Balance method
Year 1= 18,000
Year 2= 9,000
Activity Based method
Year 1= 8,000
Year 2=9,200
Explanation:
Calculation for the annual depreciation for the first two years using Straight line method for year 1 & 2
STRAIGHT LINE METHOD
Year 1 =(36,000 - 6400) / 4 year
Year 1 =29,600/4 year
Year 1= 7,400
Year 2 =(36,000 - 6400) / 4 year
Year 2 =29,600/4 year
Year 2= 7,400
Calculation for the annual depreciation for the first two years using Double - Declining Balance method
DOUBLE DECLINE BALANCE METHOD
Year 1= (2/4) x (36,000 - 0)
Year 1= (2/4) x 36,000
Year 1= 18,000
Year 2= (2/4) x (36,000 - 18,000)
Year 2= (2/4) x18,000
Year 2= 9,000
Calculation for the annual depreciation for the first two years using Activity Based method
ACTIVITY BASED METHOD
Year 1= [ (36,000 - 6,400) / (148,000) ] x (40,000 miles)
Year 1=( 29,600/148,000)×40,000 miles
Year 1=0.2×40,000 miles
Year 1= 8,000
Year 2= [ (36,000 - 6,400) / (148,000) ] x (46,000 miles)
Year 2 =(29,600/148,000)×46,000 miles
Year 2=0.2×46,000 miles
Year 2 = 9,200
Therefore the annual depreciation for the first two years is:
Straight line method
Year 1. $7,400
Year 2. $7,400
Double - Declining Balance method
Year 1= 18,000
Year 2= 9,000
Activity Based method
Year 1= 8,000
Year 2=9,200
Ответ:
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