Question
Chubbyville purchases a delivery van for $24,800. Chubbyville estimates a four-year service life and a residual value of $1,900. During the four-year period, the company
Chubbyville purchases a delivery van for $24,800. Chubbyville estimates a four-year service life and a residual value of $1,900. During the four-year period, the company expects to drive the van 109,000 miles.
1. Straight-line Depreciation expense
3. Actual miles driven each year were 30,000 miles in Year 1; 25,000 miles in Year 2; 23,000 miles in Year 3; and 22,000 miles in Year 4. Note that actual total miles of 100,000 fall short of expectations by 9,000 miles. Calculate annual depreciation for the four-year life of the van using activity-based.
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