Question
The car dealer gave Unicorn a $2,000 cash discount off the $31,000 list price. However, Unicorn paid an additional $6,000 to equip the car with
The car dealer gave Unicorn a $2,000 cash discount off the $31,000 list price. However, Unicorn paid an additional $6,000 to equip the car with a more luxurious interior and high tech lighting so it would have greater appeal. Unicorn Company expected the car to have a five-year useful life and a $5,000 salvage value. Unicorn also expected to use the car for 150,000 miles before disposing of it. Unicorn used the car, and it was driven 50,000 / 10,000 / 40,000 / 30,000 / 20,000 miles during each use year respectively. Unicorn sold the car on January 1, 2020, for $7,500 cash. (SHOW ALL CALUCUALTIONS)
- What is the cost of the car that Unicorn Company will record?
- Under the straight line method of depreciation, how much depreciation expense will Unicorn have each year of the cars use?
- Under the double declining balance method of depreciation
- What is the percentage depreciation Unicorn will use?
- At the end of the first year, how much depreciation expense will Unicorn have for the car?
- At the end of the first year, what will be the book value the car?
- At the end of the second year, how much depreciation expense will Unicorn have for the car?
- At the end of the second year, what will be the book value the car?
- Under the units of production method of depreciation
- How much depreciation will Unicorn have for each mile driven of the car?
- How much depreciation expense will Unicorn have in the last three years under this method?
- When Unicorn sold the car, what did it recognize as a gain or loss and for how much? Show calculation in proper format and put into the accounting equation.
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