A company purchases a delivery van for $23,000. The van is estimated to have a four-year service life and a residual value of $2,100. During the four-year period, the company expects to drive the van 110,000 miles. Required: Calculate annual depreciation for the four-year life of the van using each of the following methods. 1. Straight-line 2. Double-declining-balance 3. Activity-based (Actual miles driven each year were 20,000 miles in Year 1; 29,000 miles in Year 2; 22,000 miles in Year 3; and 27,000 miles in Year 4. Note that actual total miles of 98,000 fall short of expectations by 12,000 miles.)
A company purchases a delivery van for $23,000. The van is estimated to have a four-year service life and a residual value of $2,100. During the four-year period, the company expects to drive the van 110,000 miles. Required: Calculate annual depreciation for the four-year life of the van using each of the following methods. 1. Straight-line 2. Double-declining-balance 3. Activity-based (Actual miles driven each year were 20,000 miles in Year 1; 29,000 miles in Year 2; 22,000 miles in Year 3; and 27,000 miles in Year 4. Note that actual total miles of 98,000 fall short of expectations by 12,000 miles.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:A company purchases a delivery van for $23,000. The van is estimated to have a four-year service life and a residual value of $2,100.
During the four-year period, the company expects to drive the van 110,000 miles.
Required:
Calculate annual depreciation for the four-year life of the van using each of the following methods.
1. Straight-line
2. Double-declining-balance
3. Activity-based (Actual miles driven each year were 20,000 miles in Year 1; 29,000 miles in Year 2; 22,000 miles in Year 3; and 27,000
miles in Year 4. Note that actual total miles of 98,000 fall short of expectations by 12,000 miles.)
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Calculate annual depreciation for the four-year life of the van using the double-declining-balance method. (Round your
depreciation rate to 2 decimal places. Round your final answers to the nearest whole dollar.)
Year
1
2
3
4
Total
Required 3
End of Year Amounts
Depreciation Accumulated
Expense Depreciation
$
0
Book Value
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