Reference no: EM132611806

Delivery truck purchased on January 1, 2010

a. Cost 13,000

b. Expected salvage value 1,000

c. Estimated useful life in years 5

d. Estimated useful life in miles 100,000

Answer this exercise using the three methods of calculating depreciation

Question a: Using Straight line method:

1) Calculate Annual depreciation.

2) Prepare an annual depreciation (table), include all information to the 5 years, It consists of 6 columns with the date column, and explain how you get the salvage value at the end of the table.

Question b: Double declining method:

1) Prepare an annual depreciation (table), include all information to the 5 years, It consists of 6 columns with the date column, and explain how you get the salvage value at the end of the table.

Question c: Using Units of activity method:

1) What is the depreciation expense per unit(mile) ?

2) What is depreciation expense in year 1 ?

3) What is depreciation expense in year 2?