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At the beginning of the current year, Lucianno's Pizza purchased a car to be used in delivering pizzas. The car cost $14,000. It will
At the beginning of the current year, Lucianno's Pizza purchased a car to be used in delivering pizzas. The car cost $14,000. It will be used for 5 years, after which its residual value will be about $2,000. In those 5 years, Lucianno's estimates that the car will be driven 80,000 miles. 1. Calculate depreciation for all 5 years, using the straight-line method. 2. Assume that the car was driven 10,000 miles in year 1; 15,000 in year 2; 18,000 in year 3; 20,000 in year 4; and 17,000 in year 5. Calculate depreciation, using the units-of-production method for all 5 years. Year 1 Year 2 Year 3 Year 4 Year 5 Actual Miles Depreciation Rate. Depreciation Expense
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