Question

In: Accounting

Bridgeport Company purchased a delivery truck for 27,000 on January 1,2020. The truck has an expected...

Bridgeport Company purchased a delivery truck for 27,000 on January 1,2020. The truck has an expected salvage value 1,500, and is expected to be driven 102,000 miles over its estimated useful life of 10 years. Actual miles driven were 12,800 in 2020 and 14,300 in 2021

Compute depreciation expense for 2020 and 2021 using the straight-line method, the units-of-activity method, and the double-declining-balance method

Solutions

Expert Solution

Stright line Method
Particulars Stright line method
Value of Truck(assumed as $) 27000
Salvage value after 10 years($) 1500
Net Value 25500
Life of the Asset in years 10
Depreciation per year 2020(25500/10) 2550
Depreciation per year 2021(25500/10) 2550
Units of activity method
Particulars Units of activity method
Value of Truck(assumed as $) 27000
Salvage value after 10 years($) 1500
Net Value 25500
Life of the Asset in miles 102000
Depreciation per miles($)(25500/102000) 0.25
Actual miles in 2020 12800
Depreciation for 2020(12800*.25)$ 3200
Actual miles in 2021 14300
Depreciation for 2021(14300*.25)$ 3575
Double declining Stright line method
Particulars Double declining Stright line method
Value of Truck(assumed as $) 27000
Salvage value after 10 years($) 1500
Net Value 25500
Life of the Asset in years/miles 10
Depreciation per year 2020(25500/10)*2 5100
Depreciation per year 2021(25500/10)*2 5100

Related Solutions

Swifty Company purchased a delivery truck for $26,000 on January 1, 2020. The truck has an...
Swifty Company purchased a delivery truck for $26,000 on January 1, 2020. The truck has an expected salvage value of $1,000, and is expected to be driven 100,000 miles over its estimated useful life of 10 years. Actual miles driven were 12,800 in 2020 and 12,000 in 2021. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation expense $ per mile eTextbook and Media List of Accounts Compute depreciation expense for 2020...
Linton Company purchased a delivery truck for $28,000 on January 1, 2017. The truck has an...
Linton Company purchased a delivery truck for $28,000 on January 1, 2017. The truck has an expected salvage value of $2,200, and is expected to be driven 110,000 miles over its estimated useful life of 10 years. Actual miles driven were 12,300 in 2017 and 10,000 in 2018. Collapse question part (a1) Correct answer. Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $Entry field with correct...
linton company purchased a delivery truck for 33.000 on january 1 2017 the truck has an...
linton company purchased a delivery truck for 33.000 on january 1 2017 the truck has an expected salvage value of 1,300 and is expected to be driving 109,000 miles over its esitmated useful of life of 9 years. acutal miles driving were 15,400 for 2017 and 12,500 in 2018 what is the depreication expense for 2017 and 2018 using the stright line method , the unit of activity method and the decling balance method
Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an...
Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an expected salvage value of $2,100, and is expected to be driven 106,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,300 in 2017 and 13,400 in 2018. Correct answer. Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $Entry field with correct answer .25 per mile...
"A local delivery company has purchased a delivery truck for $22,000. The truck will be depreciated...
"A local delivery company has purchased a delivery truck for $22,000. The truck will be depreciated under MACRS as a five-year property. The trucks market value (salvage value) is expected to decrease by $2,000 per year. It is expected that the purchase of the truck will increase its revenue by $11,000 annually. The O&M costs are expected to be $4,800 per year. The firm is in the 40% tax bracket, and its MARR is 13.7%. If the company plans to...
"A local delivery company has purchased a delivery truck for $19,000. The truck will be depreciated...
"A local delivery company has purchased a delivery truck for $19,000. The truck will be depreciated under MACRS as a five-year property. The trucks market value (salvage value) is expected to decrease by $2,100 per year. It is expected that the purchase of the truck will increase its revenue by $11,000 annually. The O&M costs are expected to be $3,800 per year. The firm is in the 40% tax bracket, and its MARR is 15.3%. If the company plans to...
Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected...
Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given below. The company's cost of capital is 12.5 percent. Year/ Annual Operating Cash Flow/ Salvage Value 0/ $22,500/ $22,500 1/ 6,250/ 17,500 2/ 6,250/ 14,000 3/ 6,250/ 11,000 4/ 6,250/ 5,000 5/...
Skysong, Inc. purchased a delivery truck for $32,400 on January 1, 2019. The truck has an...
Skysong, Inc. purchased a delivery truck for $32,400 on January 1, 2019. The truck has an expected salvage value of $2,400, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,700 in 2019 and 12,900 in 2020. Compute depreciation expense for 2019 and 2020 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (Round depreciable cost per unit to 2 decimal places, e.g. 0.50...
On January 1, Town Spa Pizza purchased a delivery truck for $36,000. The truck has an...
On January 1, Town Spa Pizza purchased a delivery truck for $36,000. The truck has an estimated useful life of 10 years or 140,000 miles and an estimated residual value of $8,000. Town Spa’s fiscal year is the calendar year. Calculate the amounts requested below. 1)Depreciation Expense for the year, using the production method. Assume 22,000 miles were driven this year: A) $4,400 B) $5,657 C)2,800 D)3,600 2)The total accumulated depreciation after the truck has been used for 5 years,...
ABC Delivery Company purchased a new delivery truck on January 1 with an original cost of...
ABC Delivery Company purchased a new delivery truck on January 1 with an original cost of $50,000. The company estimates it will use the truck for 5 years and drive a total of 100,000 miles. It plans to sell the truck at the end of the five years for $5,000. During the first year, the truck was driven 15,000 miles. What is the depreciation for the first year using the DoubleDeclining Balance method? $10,000 $18,000 $7,500 $20,000 $6,750 $9,000
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT