Question

Depreciation for Partial Periods Bar Delivery Company purchased a new delivery truck for $45,000 on April 1, 2019. The truck is expected to have a service life of 10 years or 150,000 miles and a residual value of $3,000. The truck was driven 12,000 miles in 2019 and 20,000 miles in 2020. Bar computes depreciation expense to the nearest whole month. Required: Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $ 2020 $ Sum-of-the-years'-digits method 2019 $ 2020 $ Double-declining-balance method 2019 $ 2020 $ Activity method 2019 $ 2020 $ For each method, what is the book value of the machine at the end of 2019

Answer 1

deded

Step-by-step explanation:

Answer 2

Instructions are below.

Step-by-step explanation:

Giving the following information:

Purchasing price= $45,000

Useful life= 10 years

Salvage value= $3,000

Activity base= 150,000 miles

The truck was driven 12,000 miles in 2019 and 20,000 miles in 2020.

We need to calculate the depreciation expense for 2019 and 2020.

Straight-line method:

Annual depreciation= (original cost - salvage value)/estimated life (years)

General= (45,000 - 3,000)/10= $4,200

2019:

Depreciation= (4,200/12)*9= $3,150

Book value= 45,000 - 3,150= 41,850

2020:

Depreciation= $4,200

Book value= $37,650

Double-declining balance:

Annual depreciation= 2*[(book value)/estimated life (years)]

2019:

Depreciaiton= [(2*4,200)/12]*9= $6,300

Book value= 35,700

2020:

Depreciation= 2*[(35,700/10)]= $7,140

Book value= 35,700 - 7,140= $28,560

Activity-based:

Annual depreciation= [(original cost - salvage value)/useful life of production in miles]*miles operated

2019:

Depreciation= [(45,000 - 3,000)/150,000]*12,000= $3,360

Book value= 45,000 - 3,360= $41,460

2020:

Depreciation= 0.28*20,000=$5,600

Book value= 41,460 - 5,600= $35,860