Depreciation Methods}

Quick-as-Lightning, a delivery service, purchased a new delivery truck for \(\$ 45,000\) on January 1 , 2018. The truck is expected to have an estimated useful life of 10 years or 150,000 kilometres and an expected residual value of \(\$ 3,000\). The truck was driven 15,000 kilometres in 2018 and 13,000 kilometres in 2019 .

\section*{Required:}

1. Compute depreciation expense for 2018 and 2019 using the

(a) straight-line method,

(b) double-declining-balance method, and

(c) units-of-production method.

2. For each method, what is the book value of the machine at the end 2018? At the end of 2019 ?

3. If Quick-as-Lightning used an estimated eight-year useful life or 100,000 kilometres and an estimated residual value of \(\$ 1,000\), what would be the effect on

(a) depreciation expense and

(b) book value under each of the depreciation methods?

\section*{Exercise