Tasty Subs acquired a delivery truck on October 1, 2021, for $26,500. The company estimates a residual value of $3,500 and a six-year service life. It expects to drive the truck 100,000 miles. Actual mileage was 6,000 miles in 2021 and 21,000 miles in 2022.**Required:**Calculate depreciation expense using the activity-based method for 2021 and 2022, assuming a December 31 year-end. *(Do not round your intermediate calculations.)*| | 2021 | 2022 ||------------------|------|------|| Depreciation expense | | |**Diagram Explanation:**This diagram consists of a two-column table labeled with the years 2021 and 2022. Underneath, it provides space to calculate and enter the depreciation expense for each year. The activity-based method of depreciation is used, requiring the actual mileage data to determine the expense.

Depreciable cost=Total Cost-Residual value=$26,500-$3,500=$23,000

Answered: Tasty Subs acquired a delivery truck on…

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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Tasty Subs acquired a delivery truck on October 1, 2021, for $25,800. The company estimates a residual value of $2,400 and a six- year service life. Required: Calculate depreciation expense using the straight-line method for 2021 and 2022, assuming a December 31 year-end. 2021 2022 Depreciation expense
Nevertire Ltd purchased a delivery van costing $52,000. It is expected to have a residual value of$12,000 at the end of its useful life of 4 years or 200,000 kilometres. Ignore GST.Required:a) Assume the van was purchased on 1 July 2019 and that the accounting period ends on 30 June.Calculate the depreciation expense for the year 2019–20 using each of the following depreciationmethods (6 marks) straight-line diminishing balance (depreciation rate has been calculated as 31%) units of production (assume the van was driven 78,000 kilometres during the financial year)b) Record the adjusting entries for the depreciation at 30 June 2021 using diminishing balancemethod. c) Show how the van would appear in the balance sheet prepared at the end of year 2 using Straightline method.
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