On January 1, 2016, the Excel Delivery Company purchased a delivery van for $45,
ID: 2485232 • Letter: O
Question
On January 1, 2016, the Excel Delivery Company purchased a delivery van for $45,000. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 120,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. (Do not round intermediate calculations.) Straight line. Sum-of-the-years' digits. Double-declining balance. Units of production using miles driven as a measure of output, and the following actual mileage:Explanation / Answer
straight line 8400 (45000-3000)/5 sum of years (5+4+3+2+1) 15 year depreciation depreciation 2016 15000 45000*5/15 2017 12000 45000*4/15 2018 9000 45000*3/15 2019 6000 45000*2/15 2020 3000 45000*1/15 double declining 2*(1/5) 0.4 year depreciation 2016 18000 (45000*0.4) 2017 10800 ((45000-18000)*0.4) 2018 6480 ((45000-18000-10800)*0.4) 2019 3888 ((45000-18000-10800-6480)*0.4) 2020 2332.8 ((45000-18000-10800-6480-3888)*0.4) miles driven year miles depreciation 2016 34000 12750 2017 20000 7500 2018 27000 10125 2019 32000 12000 2020 33000 12375