Answered: Year 1 2 3 4 VE 5 Total Straight-line… | bartleby

FINANCIAL ACCOUNTING

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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**Accounting 1A: Chapter 9 - Long-Term Assets**

### Depreciation Calculations

Mandeline Cosmetics purchased a company van for $50,000. The van is expected to have a residual value of $10,000 and a useful life of 5 years or 140,000 miles. Calculate the depreciation expense under three methods.

#### Miles driven for each of the five years:
- Year 1: 25,000 miles
- Year 2: 40,000 miles
- Year 3: 50,000 miles
- Year 4: 15,000 miles
- Year 5: 10,000 miles

#### Depreciation Expense

| Year | Straight-line Method | Units of Production Method | Double Declining Balance Method |
|------|----------------------|----------------------------|---------------------------------|
| 1 | | | |
| 2 | | | |
| 3 | | | |
| 4 | | | |
| 5 | | | |
| Total| | | |

### Explanation:
The table is designed to calculate and compare the depreciation expense of the van using three different methods:

- **Straight-line Method**: This method spreads the cost evenly over the useful life of the asset.
- **Units of Production Method**: This method calculates depreciation based on the actual usage of the asset, measured in miles driven.
- **Double Declining Balance Method**: This approach applies a higher depreciation rate in the early years of the asset's life.

Each row in the table represents a year, and columns represent the different depreciation methods. The total row will sum up the depreciation expenses over the five years.

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