Question
Chubbyville purchases a delivery van for $22,500. Chubbyville estimates a four-year service life and a residual value of $2,100. During the four-year period, the company
Chubbyville purchases a delivery van for $22,500. Chubbyville estimates a four-year service life and a residual value of $2,100. During the four-year period, the company expects to drive the van 108,000 miles. Calculate annual depreciation for the four-year life of the van using each of the following methods.
1. Straight-line.?
3. Actual miles driven each year were 19,000 miles in Year 1; 30,000 miles in Year 2; 22,000 miles in Year 3; and 25,000 miles in Year 4. Note that actual total miles of 96,000 fall short of expectations by 12,000 miles. Calculate annual depreciation for the four-year life of the van using activity-based. (Round your depreciation rate to 2 decimal places.)
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