Depreciation Methods

ABC Co purchased a truck on January 1, 2015 for $25,000; it cost $2500 to have it delivered, $1500 to have it installed, and taxes and title fees were $600 and $400, respectively. The truck has an estimated salvage value of $6,000 and is expected to last 5 years and 150,000 miles.

1. Calculate depreciation expense and book value for each year under the Straight Line Method and the Double Declining Balance. (10 Points each)

Straight Line Double-Declining Balance

Year Expense Book Value................................... Expense Book Value

2015

2016

2017

2018

2019

2. Assume the truck was driven 22,000 miles in 2018 and 25,000 miles in 2019. Calculate depreciation expense and book value for the last two years using the units-of-activity depreciation method. (5 Points)

Year Units of Activity Expense Book Value

2018 22,000

2019 25,000