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Depreciation Methods Quick-as-Lightning, a delivery service, purchased a new delivery truck for $45,000 on January 1, 2019. The truck is expected to have a useful life of 10 years or 150,000 miles and an expected residual value of $3,000. The truck was driven 15,000 miles in 2019 and 13,000 miles in 2020. Required: 1. Compute depreciation expense for 2019 and 2020 using the (a) straight-line method, (b) double-declining-balance method, and (c) units-of-production method. 2. For each method, what is the book value of the machine at the end 2019? At the end of 2020? 3. CONCEPTUAL CONNECTION If Quick-as-Lightning used an 8-year useful life or 100,000 miles and a residual value of $1,000, what would be the effect on (a) depreciation expense and (b) book value under each of the depreciation methods?

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 7, Problem 50E
Textbook Problem

Depreciation Methods

Quick-as-Lightning, a delivery service, purchased a new delivery truck for $45,000 on January 1, 2019. The truck is expected to have a useful life of 10 years or 150,000 miles and an expected residual value of $3,000. The truck was driven 15,000 miles in 2019 and 13,000 miles in 2020.

Required:

1. Compute depreciation expense for 2019 and 2020 using the (a) straight-line method, (b) double-declining-balance method, and (c) units-of-production method.

2. For each method, what is the book value of the machine at the end 2019? At the end of 2020?

3. CONCEPTUAL CONNECTION If Quick-as-Lightning used an 8-year useful life or 100,000 miles and a residual value of $1,000, what would be the effect on (a) depreciation expense and (b) book value under each of the depreciation methods?

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Chapter 7 Solutions

Cornerstones of Financial Accounting
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