Quick-as-Lightning, a delivery service, purchased a new delivery truck for $45,000 on January 1, 2019. The truck is expected to have a useful life of 10 years or 150,000 miles and an expected residual value of $3,000. The truck was driven 15,000 miles in 2019 and 13,000 miles in 2020.
Required:
1. Compute depreciation expense for 2019 and 2020 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 2019? At the end of 2020?
3. If Quick-as-Lightning used an 8-year useful life or 100,000 miles and a residual value of $1,000, what would be the effect on
(a) Depreciation expense and
(b) Book value under each of the depreciation methods?