Linton company purchased a delivery truck for 29000 on January 1, 2017. The truc

Question

Linton company purchased a delivery truck for 29000 on January 1, 2017. The truck has an expected salvage value of 1500, and is expected to be driven 100000 miles over it's estimated useful life of 10 years. Actual miles driven were 12300 in 2017 and 13200 in 2018.

Compute depreciation expense for 2017 and 2018 using(1) the straight line method. (2) the units of activity method, and (3) the double declining balance method.

Assume that Linton uses the straight line method. Prepare the journal entry to record 2017 depreciation.

Assume that Linton uses the straight-line method. Show how the truck would be reported in the December 31, 2017, balance sheet.

Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The t estimated useful life of 10 years. Actual miles driven were 12,300 in 2017 and 13, Calculate depreciation expense per mile under units-of-activity method. (Round a Depreciation expense per mile LINK TO TEXT Compute depreciation expense for 2017 and 2018 using (1) the straight-line method, depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate Depreciation Expense 2017 2018 (1) Straight-line method (2) Units-of-activity method (3) Declining-balance method Assume that Linton uses the straightline method, Prepare the jounal entry to record 20

Explanation / Answer

Depreciation expense per mile under units of activity method

Purchase price of the truck

         29,000.00

Less: Salvage value

           1,500.00

Depreciable value

         27,500.00

Total expected miles to be driven

100000 miles

Depreciation expense per mile (27500/100000) ($)

               0.2750

Depreciation expense for 2017 and 2018

Year

                 2,017

                   2,018

Straight line method (Calculation below)

           2,750.00

             2,750.00

Purchase price of the truck

         29,000.00

Less: Salvage value

           1,500.00

Depreciable value

         27,500.00

Useful life

10 years

Depreciation per year (27500/10)

           2,750.00

Units of activity method:

Purchase price of the truck

         29,000.00

Less: Salvage value

           1,500.00

Depreciable value

         27,500.00

Total expected miles

100000 miles

Miles driven in 2017

12300 miles

Depreciation for 2017 (27500 x 12300/100000)

           3,382.50

Miles driven in 2018

13200 miles

Depreciation for 2017 (27500 x 13200/100000)

           3,630.00

Declining balance method

Dep. rate in %

Normal rate (100/10)

                 10.00

Double declining rate (10 x 2)

                 20.00

Depreciation in 2017 (29000 x 20%)

           5,800.00

Depreciation of 2018 (29000 - 5800) x 20%

           4,640.00

Linton Company

Partial Balance sheet

Truck

         29,000.00

Less: depreciation for 2017

           2,750.00

Book value of Truck as on 31/12/2017

           26,250.00

Depreciation expense per mile under units of activity method

Purchase price of the truck

         29,000.00

Less: Salvage value

           1,500.00

Depreciable value

         27,500.00

Total expected miles to be driven

100000 miles

Depreciation expense per mile (27500/100000) ($)

               0.2750

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