Chapter A, Problem 2P

Use the information in Problem A-1 to solve this problem. Assume the delivery van is expected to have a useful life of 100,000 miles (Year 1, 40,000 miles; Year 2, 30,000 miles; Year 3, 20,000 miles; Year 4, 10,000 miles).

Required

Prepare a schedule of depreciation using the units-of-production method.

Check Figure

Year 3 depreciation, $3,200

PROBLEM A-1 A delivery van was bought for $18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be $2,000.