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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Use the information in Problem A-1 to solve this problem. Assume the delivery van is expected to have a useful life of 100,000 miles (Year 1, 40,000 miles; Year 2, 30,000 miles; Year 3, 20,000 miles; Year 4, 10,000 miles).

Required

Prepare a schedule of depreciation using the units-of-production method.

Check Figure

Year 3 depreciation, $3,200

PROBLEM A-1 A delivery van was bought for $18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be $2,000.

To determine

Prepare depreciation schedule for the four year estimated useful life of the delivery van under units-of-production depreciation method.

Explanation

Units-of-production method: The depreciation method which assumes that the consumption of economic benefits of long-term asset is based on the production capacity or output, is referred to as units-of-production method.

Formula for units-of-production depreciation method:

Depreciation expense}={(Cost of asset–Trade-

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