Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at 536,500. Natalie would

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at 536,500. Natalie would spend an additional $2.500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at 51,500 . She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The arnual cost of vehicie insurance will be $2,400. Natalie estimates that at the end of the 5 -year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2020, and it will be ready for use on September 1, 2020 Natalie is concemed about the impact of the var's cost on her income statement and balance sheet. She has come to you for advice on calculating the van's depreciation. (0) Determine the cost of the van. Prepare three depreciation tables for 2020,2021, and 2022: one for straight-line depreciation (similar to the one in lllustration 9. 10), one for double-declining balance depreciation (Iliustration 9.14), and one for units-of-activity depreciation (Illustration 9.12). For units of -activity. Natalie estimates she will drive the van as follows: 15,000 miles in 2020; 45,000 miles in 2021; 50,000 mies in 2022: 45,000 miles in 2023;40,000 miles in 2024. Recall that Cookie Creations has a December 31 year eend. (Round. depreciation cost/unit to 3 decimal places, e.s 0.225. Double-declining-balance depreciation Double-declining-balance depreciation Units-of activity depreciation What impact will the three methods of depreciation have on Natalie's balance sheet at December 31,2020 ? What impact will the What.minalioric haua in Natalie's income statement in 2020

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ACC 120 Wake Tech Financial Accounting W Connect Plus Access

Authors: J. David Spiceland

1st Edition

1308168926, 978-1308168920

More Books

Students also viewed these Accounting questions