Question
Jalen Reagor, Inc. (JRI) purchases a large van for $23,600 to use for its football equipment repair business. JRI estimates a four-year service life and
Jalen Reagor, Inc. (JRI) purchases a large van for $23,600 to use for its football equipment repair business. JRI estimates a four-year service life and a residual value of $2,300 for the van. During the four-year period, the company expects to drive the van 108,000 miles. Calculate annual depreciation for the four-year life of the van using each of the following methods.
1. Straight-line.
2. Double-declining-balance. (Round your depreciation rate to 2 decimal places. Round your final answers to the nearest whole dollar.)
3. Actual miles driven each year were 18,000 miles in Year 1; 31,000 miles in Year 2; 23,000 miles in Year 3; and 26,000 miles in Year 4. Note that actual total miles of 98,000 fall short of expectations by 10,000 miles. Calculate annual depreciation for the four-year life of the van using activity-based. (Round your depreciation rate to 2 decimal places.)
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