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Tumnus Company purchased a delivery truck for $30,000 on January 1, 2012. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2012 and 12,000 in 2013.
Instructions
(a) Compute depreciation expense for 2012 and 2013 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method.
(b) Assume that Tumnus uses the straight-line method.
(1) Prepare the journal entry to record 2012 depreciation.
(2) Show how the truck would be reported in the December 31, 2012, balance sheet.
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