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Bob's Cars purchased a new car for use in its business on January 1, 2017. It...

Bob's Cars purchased a new car for use in its business on January 1, 2017. It paid $30,000 for the car. Charm expects the car to have a useful life of four years with an estimated residual value of zero. Charm expects to drive the car as follows

Year 2017: 20,000 miles driven

Year 2018: 45,000 miles driven

Year 2019: 40,000 miles driven

Year 2020: 15,000 miles driven

Total Miles Driven: 120,000 miles

1. Using the straight-line method of depreciation, calculate the following amounts for the car for each of the four years of its expected life:
a.   Depreciation expense
b.   Accumulated depreciation balance
c.   Book value

2. Using the Units-of-Production method of depreciation, calculate the following amounts for the car for each of the four years of its expected life:
a.   Depreciation expense
b.   Accumulated depreciation balance
c.   Book value

3. Using the Double-Declining-Balance method of depreciation, calculate the following amounts for the car for each of the four years of its expected life:
a.   Depreciation expense
b.   Accumulated depreciation balance
c.   Book value

4. Using the Double-Declining-Balance method of depreciation, calculate the following and record the appropriate journal entry assuming all events occurred at end of 2018.
a.   Assume the car was involved in an accident, damaged beyond repair, and disposed of.
b.   Assume the car was involved in an accident and sold for $1,000.
c.   Assume the car was limited edition and resold for $24,000.

Solutions

Expert Solution

For calculation ref:

ekkarill92 answered 2 years ago
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