Question

Depreciation for Partial Periods

Bar Delivery Company purchased a new delivery truck for $36,000 on April 1, 2019. The truck is expected to have a service life of 10 years or 180,000 miles and a residual value of $3,000. The truck was driven 12,000 miles in 2019 and 16,000 miles in 2020. Bar computes depreciation expense to the nearest whole month.

Required:

1. Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.)
   1. Straight-line method

      2019	$ fill in the blank 1
      2020	$ fill in the blank 2

   2. Sum-of-the-years'-digits method

      2019	$ fill in the blank 3
      2020	$ fill in the blank 4

   3. Double-declining-balance method

      2019	$ fill in the blank 5
      2020	$ fill in the blank 6

   4. Activity method

      2019	$ fill in the blank 7
      2020	$ fill in the blank 8

2. For each method, what is the book value of the machine at the end of 2019? At the end of 2020? (Round your answers to the nearest dollar.)
   1. Straight-line method

      2019	$ fill in the blank 9
      2020	$ fill in the blank 10

   2. Sum-of-the-years'-digits method

      2019	$ fill in the blank 11
      2020	$ fill in the blank 12

   3. Double-declining-balance method

      2019	$ fill in the blank 13
      2020	$ fill in the blank 14

   4. Activity method

      2019	$ fill in the blank 15
      2020	$ fill in the blank 16

Answer 1

1	Depreciation under SLM=	Original cost - Scrap Value / Useful Life
		36000 - 3000 / 10
		3300
	Straight-line method	2019	2020
	Depreciation Expense=	2475	3300
		(3300 * 9months/ 12 months)
	Year 2019	30525	(33000-2475
	2020	27225	(30525-3300
2	Sum of Year of Digit Method
	Year	Estimated useful life	SYD	Annual Deprecitaion			Book Value at the end
	2019	10	10/55	6000	(33000*10/55')	27000	(33000-6000)
	2020	9	9/55'	5400	(33000 * 9 / 55')	21600	(27000-5400)
	2021	8
	2022	7
	2023	6
	2024	5
	2025	4
	2026	3
	2027	2
	2028	1
		55
3	Double Declining Method Rate
	Double Declining Rate = 100 / Useful Life * 100
	Double Declining Method Rate = 10 / 100 * 100
	Double Declining Method Rate = 10%
	Double Declining Method Rate = Double Declining Rate * 2
	10 * 2'
	Double Declining Method Rate = 20%
	Year	Book Value at Begaining	Depreciation	Depreciation at the end
	2019	36000	7200	28800
	2020	28800	5760	23040
4)	Activity Based Depreciation
	Depreciation =( Cost of Assets - Salvage)* Actual Activity / Estimated Activity
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