Linton Company purchased a delivery truck for $31,000 on January 1, 2017. The tr

Question

Linton Company purchased a delivery truck for $31,000 on January 1, 2017. The truck has an expected salvage value of $1,700, and is expected to be driven 108,000 miles over its estimated useful life of 8 years. Actual miles driven were 12,200 in 2017 and 11,200 in 2018.

The first part of the question had me calculate depreciation expense per mile under units-of-activity method, which is .27 per mile.

The following is the part I need help with: Please explain how to calculate as well, thanks

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.

Explanation / Answer

A)Depreciation under Straight line

Depreciation per year = (cost -salvage)/life

                        = (31000 -1700)/ 8

                          = 29300/ 8 =$ 3662.50 per year

2017 = 3662.5

2018 = 3662.5

2)Units of activity

Depreciation = (31000-1700)/108000

                    = .2713 per miles

2017 = .2713 * 12200 = $ 3309.81

2018 = .2713 * 11200 = $ 3038.56

3)Double declining rate :2 /Useful life = 2/8 = 25%

2017 = 31000*.25 = 7750

2018 = (31000-7750)*.25 = 5812.5

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