3.. On January 13, 2013, Precision Oil Company purchased a drilling truck for $ 90 000. Precision expects the truck to last five years or 200 000 miles, with and estimated residual value of $ 15 000 at the end of that time. During 2014, the truck is driven 48 000 miles. Precisions year end is December 31. Compute the depreciation for 2014 under each of the following methods: a) straight-line, b) production, c) double-declining methods.

4. Crescendo Company purchased a computer for $ 1 120. It has an estimated useful life of four years and an estimated residual value of $ 120. Compute the depreciation charge for each of the four years using the double-declining-balance method.

5. Bychowski Company purchased land containing an estimated 10 million tons of ore for a cost of $3 300 000. The land without the ore is estimated to be worth $ 600 000. The company expects that all the usable ore can be mined in 10 years. Buildings costing $ 300 000 with an estimated useful life of 20 years were erected on the site, Equipment costing $ 360 000 with and estimated useful life of 10 years was installed. Because of the remote location, neither the buildings nor the equipment has an estimated residual value. During its first year of operation, the company mined and sold 450 000 tons of ore.

a) Compute the depletion charge per ton.

b) Compute the depletion expense that Bychowski should record for the year.

c) Determine the depreciation expense for the year for the buildings, making it proportional to the depletion.

d) Determine the depreciation expense for the year for the equipment under two alternatives: 1) making the expense proportional to the depletion and 2) using the straight-line method.