Linton Company purchased a delivery truck for $34,000 on January 1, 2022. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023.InstructionsCompute depreciation expense for 2022 and 2023 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method.Assume that Linton uses the straight-line method.Prepare the journal entry to record 2022 depreciation expense.Show how the truck would be reported in the December 31, 2022, balance sheet. ### Depreciation Calculation Example**Scenario:**Linton Company purchased a delivery truck for $34,000 on January 1, 2022. The truck is expected to have a salvage value of $2,000 and is anticipated to be driven for 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023.**Instructions:**a. Compute depreciation expense for 2022 and 2023 using: 1. The straight-line method 2. The units-of-activity method 3. The double-declining-balance methodb. Assume that Linton uses the straight-line method. 1. Prepare the journal entry to record 2022 depreciation expense. 2. Show how the truck would be reported in the December 31, 2022, balance sheet.**Explanation of Methods:**- **Straight-Line Method:** This method distributes the cost of the asset evenly over its useful life. - **Units-of-Activity Method:** This method calculates depreciation based on the actual use of the asset, often measured in miles driven or units produced. - **Double-Declining-Balance Method:** This accelerated depreciation method applies a constant rate to the declining book value of the asset each year.In the provided scenario, students can explore how different methods of depreciation affect financial statements and decision-making within a business setting.

1. Determine the depreciation expense for 2022 and 2023: Cost of truck $34,000 Less: Expected…

Answered: Linton Company purchased a delivery…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Linton Company purchased a delivery truck for $34,000 on January 1, 2022. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023.

Instructions

Compute depreciation expense for 2022 and 2023 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method.
Assume that Linton uses the straight-line method.
1. Prepare the journal entry to record 2022 depreciation expense.
2. Show how the truck would be reported in the December 31, 2022, balance sheet.

### Depreciation Calculation Example

**Scenario:**
Linton Company purchased a delivery truck for $34,000 on January 1, 2022. The truck is expected to have a salvage value of $2,000 and is anticipated to be driven for 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023.

**Instructions:**
a. Compute depreciation expense for 2022 and 2023 using:
1. The straight-line method
2. The units-of-activity method
3. The double-declining-balance method

b. Assume that Linton uses the straight-line method.
1. Prepare the journal entry to record 2022 depreciation expense.
2. Show how the truck would be reported in the December 31, 2022, balance sheet.

**Explanation of Methods:**

- **Straight-Line Method:** This method distributes the cost of the asset evenly over its useful life.

- **Units-of-Activity Method:** This method calculates depreciation based on the actual use of the asset, often measured in miles driven or units produced.

- **Double-Declining-Balance Method:** This accelerated depreciation method applies a constant rate to the declining book value of the asset each year.

In the provided scenario, students can explore how different methods of depreciation affect financial statements and decision-making within a business setting.

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