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

ekkarill92 answered 1 year ago

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