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Assume you have a flower shop and you bought a delivery van for $31,000. You expect the van to remain in service for three
Assume you have a flower shop and you bought a delivery van for $31,000. You expect the van to remain in service for three years (147,000 km). At the end of its useful life, you estimate that the van's residual value will be $130. You estimate the van will travel 39,000 km the first year, 59,000 km the second year, and 49,000 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? Begin by calculating straight-line depreciation expense for each year. (Round the amounts for depreciation expense to the nearest whole dollar.) Cost Year 1 31,000 Year 2 31,000 Year 3 31,000 Depreciable cost 130 130 130 Useful life, in years 3 3 3 Depreciation expense 10,290 10,290 10,290 Next show your computations for units-of-production depreciation expense for each year. (Round intermediate calculations to two decimal places. Round the amounts for depreciation expense to the nearest whole dollar. For years with $0 depreciation, make sure to enter "0" in the appropriate column.) Year 1 Year 2 Year 3 Depreciation expense
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