Linton Company purchased a delivery truck for $33,000 on January 1, 2017. The tr

Question

Linton Company purchased a delivery truck for $33,000 on January 1, 2017. The truck has an expected salvage value of $2,600, and is expected to be driven 110,000 miles over its estimated useful life of 9 years. Actual miles driven were 16,700 in 2017 and 10,600 in 2018.

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Depreciation Expense

2017

2018

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Account Titles and Explanation

Debit

Credit

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Linton Company purchased a delivery truck for $33,000 on January 1, 2017. The truck has an expected salvage value of $2,600, and is expected to be driven 110,000 miles over its estimated useful life of 9 years. Actual miles driven were 16,700 in 2017 and 10,600 in 2018.

Explanation / Answer

ans)

1.Calculation of dereciation expense per mile under units of activity method

Depreciation expense per mile = cost - salvage value / Total units of activity

= 33000 - 2600 / 110,000

= 0.28 per mile

2) Straight line method

2017 = 33000 - 2600 / 9 = 3378

2018 = 3378

  Units of activity method

2017 = 0.28 per mile X 16700 = 4676

2018 = 0.28 per mile X 10600 = 2968

Double declining method

33000 - 2600 / 9 = 3378

3378 / 33000 - 2600 = 11%

Double declining method = 11 X 2 = 22%

2017 = 33000 X 22 % = 7260

2018 = (33000 - 7260 ) X 22% = 5663

3) 2017 Depreciation expense 3378

Accumulated depreciation 3378

4) Truck = 33000

Less: Accumulated depreciation (3378)

Book value at dec31, 2017 29622

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