Deluxe Pizza bought a used Honda delivery van on January 2, 2012, for $22,000. The van was expected to remain in service for four years (113,125 miles). At the end of its useful life, Deluxe officials estimated that the van’s residual value would be $3,900. The van traveled 30,000 miles the first year, 32,000 miles the second year, 18,125 miles the third year, and 33,000 miles in the fourth year. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods discussed in this chapter. (For units-of-production and double-declining-balance, round to the nearest two decimals after each step of the calculation.)
Which method best tracks the wear and tear on the van? Which method would Deluxe prefer to use for income tax purposes? Explain in detail why Deluxe prefers this method.