Question
Crystal Auto Wash purchased a vehicle to use for deliveries and is attempting to determine how much depreciation expense would be recognized under three different
Crystal Auto Wash purchased a vehicle to use for deliveries and is attempting to determine how much depreciation expense would be recognized under three different methods. The vehicle cost 35,000 and is expected to have a value of 3500 at the end of its sixth-year life. The vehicle is expected to be used at the rate of 20,000 miles in the first year, 15,000 miles in the second and third years, 20,000 miles in the fourth, fifth and 10,000 miles in the sixth year. Required: a. Determine the amount of depreciation expense that will be recognized under each of the following depreciation methods. 1. Straight-line. 2. Double-declining-balance. (200%) 3. Units-of-output (based on miles). b. Which method is favorable for tax advantage and explain through calculation? f
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