Question
In: Accounting
On January 2, 2017, Chair King Co. purchased a new van for $45,000. The van had...
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
Solutions
Expert Solution
| 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 | |
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