Speedy Express is a family operation that has been operating in Victoria for many years. It purchased a new delivery truck on January 1, 2017, at a cost of $50,000. As Speedy delivers over a wide area, considerable mileage will be recorded on the truck each year. Speedy currently uses the straight line method but is considering using the double declining-balance method based at twice the straight line rate. Speedy expects the life of the truck to be five years at the end of which there will be a salvage value of $5,000. Speedy has a December 31st year-end.

Required

(a) Prepare a depreciation schedule that shows the annual depreciation expense and carrying value for the delivery truck for its 5-year life for both the straight line and double-diminishing balance method.

	Straight Line			Double Diminishing Balance
	Depreciation Expense	Accumulated Depreciation	Carrying Value	Depreciation Expense	Accumulated Depreciation	Carrying Value
Purchase
Year 1
Year 2
Year 3
Year 4
Year 5

Room for calculations:

Question 3 continued

(b) The truck was sold on July 1, 2019 for $10,000. Calculate the gain or loss under the double diminishing balance method and record the journal entry for the sale

Journal Entries
Date	Account Titles	Debit	Credit

Room for calculations:

Question 3 continued

(c) Speedy decides to use the Units of Production method for depreciation of the truck. Speedy expects to drive the truck for a total of 200,000 kilometers over its service life. Actual kilometers driven are: 2017 25,000 kms; and 2018 37,000 kms. Calculate depreciation expense for both 2017 and 2018 below: