P9-7A
Millar, Inc., purchased a truck to use for deliveries and is attempting to
determine how much depreciation expense would be recognized under three
different methods.
File name: P9-7A-Millar-Inc.doc File type: application/msword Price: $4
Problem
9-7A Alternative Depreciation Methods L.O. 4
Problem
9-7A Millar, Inc., purchased a truck to use for deliveries and is attempting to
determine how much depreciation expense would be recognized under three
different methods. The truck cost $20,000 and is expected to have a value of
$4,000 at the end of its five-year life. The truck is expected to be used at
the rate of 10,000 miles in the first year, 20,000 miles in the second and
third years, and 15,000 miles in the fourth and fifth years.
a.
Determine the amount of depreciation expense that will be recognized under each
of the following depreciation methods in the first and second years of the
truck's useful life. A full year's depreciation will be recognized in the first
year the truck is used. (Omit the "$"
sign in your response.)
1st year
|
2nd year
|
||
1.
|
Straight-line.
|
$
|
$
|
2.
|
Double-declining-balance.
|
$
|
$
|
3.
|
Units-of-output (based on miles).
|
$
|
$
|
b.
Prepare the plant assets section of the balance sheet at the end of the second
year of the asset's useful life under the double-declining-balance method,
assuming the truck is the only plant asset owned by Millar, Inc. (Amounts to be deducted should be indicated with a minus
sign. Omit the "$" sign in your response.)
$
|
|||
$
|
|||
SOLUTION PREVIEW
a. Determine
the amount of depreciation expense that will be recognized under each of the
following depreciation methods in the first and second years of the truck's
useful life. A full year's depreciation will be recognized in the first year
the truck is used. (Omit the "$" sign
in your response.)
|
|
|
1st year
|
2nd year
|
|
1.
|
Straight-line.
|
$
|
$
|
|
2.
|
Double-declining-balance.
|
$
|
$
|
