Exercise 7-11 (Static) Determine depreciation under three methods (LO7-4) [The following information applies to the questions displayed below.] On January 1, Speedy Delivery Company purchases a delivery van for $90,000. Speedy estimates that at th year service life, the van will be worth $30,000. During the six-year period, the company expects to drive th miles. Actual miles driven each year were 32,000 miles in year 1 and 35,000 miles in year 2. Required: Calculate annual depreciation for the first two years using each of the following methods. (Do not round yo intermediate calculations.) Exercise 7-11 (Static) Part 2 2. Double-declining-balance. Year Annual Depreciation 1 2

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Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.