Question

Speedy Delivery Company purchases a delivery van for $40,000. Speedy estimates that at the end of its four-year service life, the van will be worth $5,200. During the four-year period, the company expects to drive the van 174,000 miles.

Actual miles driven each year were 44,000 miles in year 1 and 52,000 miles in year 2.

Required:

Calculate annual depreciation for the first two years of the van using each of the following methods. (Do not round your intermediate calculations.)

1. Straight-line.

YEAR 1:

YEAR 2:

2. Double-declining-balance.

YEAR 1:

YEAR 2:

3. Activity-based.

YEAR 1:

YEAR 2:

Answer 1