Speedy Taxi Service purchased a new cab for $$33,500.$ It is expected to have a salvage value of $$1000$ and a life of $3$ years. The cab is expected to be driven $150,000$ miles over those three years. It has been driven $30,000$ miles in year $1$ and $20,000$ miles in year $2.$

a$.$ Compute the annual depreciation for the first two years under each of the following methods:

i$.$ Straight Line

ii$.$ Units$-$of$-$Activity

iii. Double$-$Declining

SHOW YOUR WORK

STAIGHT$-$LINE UNITS OF ACTIVITY DOUBLE DECLINING

YEAR $1$

YEAR $2$

b$.$ If you were the owner of the Taxi Service, which method and why would you deem most appropriate? Why?

c$.$ Calculate the Accumulated Depreciation and Book Value of the Taxi at the end of year $2$ using the straightline method.

COST ACCUMULATED

DEPRECIATION BOOK VALUE