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Assume you have a flower shop and you bought a delivery van for $37,000. You expect the van to remain in service for three years
Assume you have a flower shop and you bought a delivery van for $37,000. You expect the van to remain in service for three years (135,000 km). At the end of its useful life, you estimate that the van's residual value will be $3,250. You estimate the van will travel 35,000 km the first year, 55,000 km the second year, and 45,000 km the third year. Prepare an estimate of the depreciation expense per year for the van under the three depreciation methods. Show your computations. Which method do you think tracks the useful life cost on the van most closely? How does management determine which depreciation method to use? Cost Residual value Userui lite, in years Depreciation expense Year 1 $ 37,000 $ 3,250 3 $ 11,250 Year 2 $ 37,000 $ 3,250 3 $ 11,250 Year 3 $ 37,000 $ 3,250 3 $ 11,250 Next show your computations for units-of-production depreciation expense for each year. (Round intermediate calculations to two decimal places. For years with $0 depreciation, make sure to enter "0" in the appropriate column.) = Depreciation expense Year 1 X Year 2 X Year 3 x
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