Question

On January 2, 2017, Chair King Co. purchased a new van for $45,000. The van had an expected useful life of six years, and an expected salvage value of $15,000. The company expected that in those six years, the van would be driven for 150,000 miles based on the following schedule:

2017 – 13,000 miles

2018 – 21,000 miles

2019 – 28,000 miles

2020 – 29,000 miles

2021 – 37,000 miles

2022 – 22,000 miles

Required:

Assuming a December 31 year-end, prepare a depreciation schedule for the life of the van using:

Straight-line depreciation

Units-of-production depreciation

Double-declining-balance depreciation

Answer 1

Straight Line Depreciation				Units of Production Depreciation
Cost of the Van		$45,000		Depreciation = (No. of units Produced / Total Life in number of units)(Cost- Salvage Value)
Useful life of the van		6 years		2017	13,000.00
Salvage Value		$15,000		2018	21,000.00
				2019	28,000.00
				2020	29,000.00
Depreciation Schedule under Straight Line Method				2021	37,000.00
				2022	22,000.00
	Straight Line Method	Double Declining Balance Method		Total	150,000.00
Period	SLN	DDB		Period	Depreciation
1	$5,000.00	$15,000.00		1	2600
2	$5,000.00	$10,000.00		2	4200
3	$5,000.00	$5,000.00		3	5600
4	$5,000.00	$0.00		4	5800
5	$5,000.00	$0.00		5	7400
6	$5,000.00	$0.00		6	4400