Answer:
total cost = $100,000 + $3,000 + $600 + $10,400 = $114,000
straight line depreciation expense = ($114,000 - $12,000) x 1/5 = $20,400
year depreciation expense book value
1 $20,400 $93,600
2 $20,400 $73,200
3 $20,400 $52,800
4 $20,400 $32,400
5 $20,400 $12,000
<u>RESULTS IN HIGHER INCOME DURING THE FIRST YEAR. </u>
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units of production deprecation = ($114,000 - $12,000) / 136,000 = $0.75 per mile
year depreciation expense book value
1 $24,000 $90,000
2 $24,000 $66,000
3 $24,000 $42,000
4 $24,000 $18,000
5 $6,000 $12,000
double-declining-balance depreciation:
depreciation year 1 = $114,000 x 2/5 = $45,600
depreciation year 2 = $68,400 x 2/5 = $27,360
depreciation year 3 = $41,040 x 2/5 = $16,416
depreciation year 4 = $24,624 x 2/5 = $9,850
depreciation year 5 = $14,774 - $12,000 = $2,774
year depreciation expense book value
1 $45,600 $68,400
2 $27,360 $41,040
3 $16,416 $24,624
4 $9,850 $14,774
5 $2,774 $12,000
