On January 1, Year 1, a company purchased a delivery vehicle for $40,000. At the end of its five-year service life, it is estimated that the vehicle will be worth $4,000. During the five-year period, the company expects to drive the vehicle 121,000 miles. Required: Calculate annual depreciation for the five-year life of the vehicle using each of the following methods. 3. Units of production using miles driven as a measure of output, and the following actual mileage: Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Year Year 1 Year 2 Year 3 Year 4 Year 5 Total Miles 15,000 31,000 22,000 27,000 28,000 Depreciation $ 0

On January 1, Year 1, a company purchased a delivery vehicle for $40,000. At the end of its five-year service life, it is estimated that the vehicle will be worth $4,000. During the five-year period, the company expects to drive the vehicle 121,000 miles. Required: Calculate annual depreciation for the five-year life of the vehicle using each of the following methods. 3. Units of production using miles driven as a measure of output, and the following actual mileage: Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Year Year 1 Year 2 Year 3 Year 4 Year 5 Total Miles 15,000 31,000 22,000 27,000 28,000 Depreciation $ 0

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Description: 3edRequired information[The following information applies to the questions displayed below.]On January 1, Year 1, a company purchased a delivery vehicle for $40,000. At the end of its five-year service life, it isestimated that the vehicle will be w

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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Sabel Co. purchased assembly equipment for $608,000 on January 1, Year 1. The equipment is expected to have a useful life of 320,000 miles and a salvage value of $32,000. Actual mileage was as follows: Year 1 88,000 Year 2 84,000 Year 3 79,000 Year 4 48,000 Year 5 22,000 Required a. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation. b. Assume that Sabel earns $242,000 of cash revenue during Year 1. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in the following financial statements model. c. Assume that Sabel sold the equipment at the end of the fifth year for $33,800. Calculate the amount of gain or loss on the sale.
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