Question

On

JanuaryJanuary

11?,

20162016?,

BriskBrisk

Delivery Service purchased a truck at a cost of

$ 90 comma 000$90,000.

Before placing the truck in? service,

BriskBrisk

spent

$ 2 comma 200$2,200

painting? it,

$ 600$600

replacing? tires, and

$ 6 comma 200$6,200

overhauling the engine. The truck should remain in service for five years and have a residual value of

$ 9 comma 000$9,000.

The? truck's annual mileage is expected to be

21 comma 00021,000

miles in each of the first four years and

16 comma 00016,000

miles in the fifth

yearlong dash—100 comma 000100,000

miles in total. In deciding which depreciation method to? use,

Harold ParkerHarold Parker?,

the general? manager, requests a depreciation schedule for each of the depreciation methods? (straight-line, units-of-production, and? double-declining-balance).Read the requirements

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.

Requirement 1. Prepare a depreciation schedule for each depreciation? method, showing asset? cost, depreciation? expense, accumulated? depreciation, and asset book value.

Begin by preparing a depreciation schedule using the? straight-line method.

Straight-Line Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciable		Depreciation		Depreciation	Accumulated	Book
Date	Cost	Cost		Rate		Expense	Depreciation	Value
1-1-2016
12-31-2016			/		=
12-31-2017			/		=
12-31-2018			/		=
12-31-2019			/		=
12-31-2020			/		=

Before completing the? units-of-production depreciation? schedule, calculate the depreciation expense per unit. ?(Round depreciation expense per unit to two decimal? places.)

(		-		) /		=	Depreciation per unit
(		-		) /		=

Prepare a depreciation schedule using the? units-of-production method. ?(Enter the depreciation per unit to two decimal? places, $X.X

Answer 1

Straight-line depreciation schedule
Date	Asset	Depreciable		Dereciation		Depreciation	Accumulated	Book Value
	cost	cost *		Rate		Expense	Depreciation
1/1/2016	99000	90000
12/31/2016	99000	90000	/	5	=	18000	18000	81000
12/31/2017	99000	90000	/	5	=	18000	36000	63000
12/31/2018	99000	90000	/	5	=	18000	54000	45000
12/31/2019	99000	90000	/	5	=	18000	72000	27000
12/31/2020	99000	90000	/	5	=	18000	90000	9000
Total			/		=	90000
Purchase cost of the asset		90000
Painting		2200
Tires		600
Overhauling		6200
Total cost		99000
Salvage value		9000
Depreciable cost *		90000

2.

(	Cost of	-	Salvage	) /	Units of	=	Depreciation
	asset		Value		production		per unit
(	99000	-	9000	) /	100000	=	0.90

Units of production depreciation schedule
Date		Unts of		Dereciation		Depreciation	Accumulated	Book Value
		measurement		Rate		Expense	Depreciation
1/1/2016
12/31/2016		21000	X	0.90	=	18900	18900	80100
12/31/2017		21000	X	0.90	=	18900	37800	61200
12/31/2018		21000	X	0.90	=	18900	56700	42300
12/31/2019		21000	X	0.90	=	18900	75600	23400
12/31/2020		16000	X	0.90	=	14400	90000	9000
Total			/		=	90000