Question

On January 1, 2021, the Excel Delivery Company purchased a delivery van for $51,000. At the end of its five-year service life, it is estimated that the van will be worth $6,000. During the five-year period, the company expects to drive the van 171,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods.

Answer 1

The answer is "Complete but not absolutely right".

Step-by-step explanation:

In production technique segments, it should first calculate the cost of fuel per mile and afterward measure the depreciation.

`\ per \ mile \ rate = (\ cost - \ salvage value)/(\ Estimated \ mile )`

`\ estimated \ mile = 171000 \\\\\ per \ mile \ rate = (\$ 51000 - \$ 6000) / 171000 \\\\ \ per \ mile \ rate = $45000 / 171000 = \\\\\ per \ mile \ rate = \$ 0.263157894 per mile`

Calculating Depreciation:

`\ Depreciation \ expense = \ per \ mile \ rate * \ Mile \ drives`

`\ Depreciation \ for \ 2021 : \\\\ \ Mile \ drives \ = 11000 \\\ Depreciation = \$ 0.263157894 * 11000 \\\ Depreciation = \$ 2895`

`\ Depreciation \ for \ 2022 \ : \\\\\ Miles \ drives = 42000\\\ Depreciation = \$ 0.263157894 * 42000\\ \ Depreciation = $11053 \\\\\ Depreciation \ for \ 2023 \ :\\\\\ Miles \ drives = 43000\\\ Depreciation = \$ 0.263157894 * 43000 \\\ Depreciation = \$ 11316 \\\\\ Depreciation \ for \ 2024 \ :`

`\ Miles \ drives = 38000\\\ Depreciation = \$ 0.263157894 * 38000 \\\ Depreciation = \$ 10000 \\\\\ Depreciation \ for \ 2025 \ :\\\\\ Miles \ drives = 39000\\\ Depreciation = \$ 0.263157894 * 39000 \\\ Depreciation = \$ 10263`