On January 1, 2018, the Excel Delivery Company purchased a delivery van for $53,
ID: 2563011 • Letter: O
Question
On January 1, 2018, the Excel Delivery Company purchased a delivery van for $53,000. At the end of its five-year service life, it is estimated that the van will be worth $5,000. During the five-year period, the company expects to drive the van 150,000 miles.
Required:
Calculate annual depreciation for the five-year life of the van using each of the following methods.
1. Straight line.
2. Sum-of-the-years’-digits.
2018
2019
2020
2021
2022
3. Double-declining balance.
2018
2019
2020
2021
2022
4. Units of production using miles driven as a measure of output, and the following actual mileage:
Calculate annual depreciation for the five-year life of the van using units of production using miles driven as a measure of output, and the following actual mileage. (Do not round your intermediate calculations.)
Year
Miles
Depreciation
2018
28,000
?
2019
30,000
?
2020
41,000
?
2021
26,000
?
2022
27,000
?
Total
?
Year
Miles
Depreciation
2018
28,000
?
2019
30,000
?
2020
41,000
?
2021
26,000
?
2022
27,000
?
Total
?
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars Amount Costof Van 53,000.00 Salvage value 5,000.00 Life in years 5.00 1) SLM Depreciation per year = (53000 - 5000)/5 9,600.00 2,018.00 9,600.00 2,019.00 9,600.00 2,020.00 9,600.00 2,021.00 9,600.00 2,022.00 9,600.00 2) Sum-of-the-years’-digits sum of the years' digits depreciation calculation is = n(n+1)/2 = 5(5+1)/2 = 5*6/2 = 30/2 = 15 Year Depreciation WN 2,018.00 16,000.00 48000/15*5 2,019.00 12,800.00 48000/15*4 2,020.00 9,600.00 48000/15*3 2,021.00 6,400.00 48000/15*2 2,022.00 3,200.00 48000/15*1 48,000.00 3) Life 5 Years Double decling balance method rate = 20%*2 40% Particulars 2018 2019 2020 2021 2022 Opening Balance 53,000.00 31,800.00 19,080.00 11,448.00 6,868.80 Depreciation at 40% 21,200.00 12,720.00 7,632.00 4,579.20 1,868.80 Closing balance 31,800.00 19,080.00 11,448.00 6,868.80 5,000.00 4) Depreciation per mile = 48000/150000 0.32 Year Miles Depreciation 2,018.00 28,000.00 8,960.00 2,019.00 30,000.00 9,600.00 2,020.00 41,000.00 13,120.00 2,021.00 26,000.00 8,320.00 2,022.00 27,000.00 8,000.00 Total 152,000.00