Question
Determining depreciation amounts by three methods ______________ Piccadilly Pizza bought a used Toyota delivery van on January 2, 2019, for $19,200. The van was expected
Determining depreciation amounts by three methods
______________
Piccadilly Pizza bought a used Toyota delivery van on January 2, 2019, for $19,200. The van was expected to remain in service for four years (71,200 miles). At the end of its useful life, Ralphs officials estimated that the vans residual value would be $1,400. The van traveled 28,000 miles the first year, 20,500 miles the second year, 18,500 miles the third year, and 4,200 miles in the fourth year. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods discussed in this chapter. (For units-of-production and double-declining-balance, round to the nearest two decimals after each step of the calculation.)
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Which method best tracks the wear and tear on the van? Which method would Ralphs prefer to use for income tax purposes? Explain in detail why Ralphs prefers this method.
Test Your Knowledge Exercise 5 Instructions Show answers below, but explain how you arrived at them in the space provided. Year 2019 2020 Straight- Line FORMULA FORMULA FORMULA FORMULA Units-of- Production FORMULA FORMULA FORMULA FORMULA Double- Declining Balance FORMULA FORMULA FORMULA FORMULA 2021 2022 Show Computations Straight Line Computations: Units-of-productions Computations: Double-declining-balance Computations: Which method best tracks the wear and tear on the van? Select from list Select from list Which method for income tax purposes? Why? Enter explanation hereStep by Step Solution
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