Exercise 1. Calculating the Four Depreciation Methods: Depreciation Data: A truck (MACHINERY AND EQUIPMENT) is acquired at 1/1 Year 7 for a cost of $68,000. Estimated useful life at 1/1 Year 7 is 5 years. At 1/1 Year 7 the residual value is estimated to be $8,000 at the end of the 5-year useful life, i.e., 12/31 Year 12. The abbreviation for residual value is "RV." Estimated total miles (units) over the truck's life is 200,000 miles. Actual usage each year over the truck's life (which will not be known until after each year has passed): 50,000 miles 44,000 miles 36,000 miles Year 4: 40,000 miles 30,000 miles Year 1: Year 2: Year 3: Year 5: Total 200,000 miles Below, the amount of DEPRECIATION EXPENSE and related amounts are calculated for each of the four depreciation methods for each year of the truck's useful life. a. Straight-Line Method (SL): Residual DEPRECIATION Cost ) Life Value EXPENSE b. Units-of-Production Method (UOP): DEPRECIATION Residual Total Units Cost RATE Value (Miles) Depreciation Expense for Each Year: Actual Depreci- ation Miles DEPR. ACCUM. Year Per Year Rate XENSE DEPR. Book Value %3D Cost 2$ 68,000 1 miles X $ miles X $ miles X $ 2$ 2$ 2$ 2$ $ $ 3 $ 2$ 2$ 2$ 2$ 2$ 60,000* 4 miles X $ miles X $ Total %3D *The total depreciation must equal the cost- residual value, $60,000.