2. Ahmed Company purchased a delivery truck for $50,000 on January 1, 2012. The truck has an expected salvage value of $2,500, and is expected to be driven 120,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,000 in 2012 and 11,000 in 2013.

Instructions

(a) Compute depreciation expense for 2012 and 2013 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method.

(b) Assume that Ahmed uses the straight-line method.

(1) Prepare the journal entry to record 2012 depreciation.

(2) Show how the truck would be reported in the December 31, 2012, balance sheet.