Q.6 Millar, Inc., purchased a truck to use for deliveries and is attempting to determine how much depreciation expense would be recognized under three different methods. The truck cost $20,000 and is expected to have a value of $4,000 at the end of its five-year life. The truck is expected to be used at the rate of 10,000 miles in the first year, 20,000 miles in the second and third years, and 15,000 miles in the fourth and fifth years. Instructions Determine the amount of depreciation expense that will be recognized under each of the following depreciation methods in the first and second years of the truck’s useful life. A full year’s depreciation will be recognized in the first year the truck is used. Straight-line. Double-declining-balance.
Q.6 Millar, Inc., purchased a truck to use for deliveries and is attempting to determine how much
Instructions
- Determine the amount of depreciation expense that will be recognized under each of the following
depreciation methods in the first and second years of the truck’s useful life. A full
year’s depreciation will be recognized in the first year the truck is used.
- Straight-line.
- Double-declining-balance.
Q.7 R&R, Inc., purchased a new machine on September 1, 2009, at a cost of $180,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $10,000.
Instructions
- Prepare a complete depreciation schedule, beginning with calendar year 2009, under each of the methods listed below (assume that the half-year convention is used):
- Straight-line.
- 200 percent declining-balance.
- 150 percent declining-balance (not switching to straight-line).
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