On January 1, 2016, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 miles. Required:
Calculate annual depreciation for the five-year life of the van using each of the following methods. (Do not round intermediate calculations.)
1. Straight line
2. Sum of the years digits
3. Double declining balance
4, Units of production using miles driven as a measure of output and the following actual mileage:
Year Miles
2016 22,000
2017 24,000
2018 15,000
2019 20,000
2020 21,000

1. Straight line

years 2016 to 2020 = $6,000

2. Sum of the years digits

2016 = $10,000

2017 = $8,000

2018 = $6,000

2019 = $4,000

2020 = $2,000

3. Double declining balance

2016 = $13,200

2017 = $7,920

2018 = $4,752

2019 = $2,852

2020 = $1,276

4, Units of production using miles driven

2016 = $6,600

2017 = $7,200

2018 = $4,500

2019 = $6,000

2020 = $5,700

Explanation:

purchase cost $33,000

useful life 5 years, salvage value $3,000

expected use 100,000 miles

1. Straight line

($33,000 - $3,000) / 5 = $6,000

2. Sum of the years digits

year 1 = 5/15 x $30,000 = $10,000

year 2 = 4/15 x $30,000 = $8,000

year 3 = 3/15 x $30,000 = $6,000

year 4 = 2/15 x $30,000 = $4,000

year 5 = 1/15 x $30,000 = $2,000

3. Double declining balance

year 1 = 2 x 1/5 x $33,000 = $13,200

year 2 = 2 x 1/5 x $19,800 = $7,920

year 3 = 2 x 1/5 x $11,880 = $4,752

year 4 = 2 x 1/5 x $7,128 = $2,851.20 ≈ $2,852

year 5 = $4,276 - $3,000 = $1,276

4, Units of production using miles driven

depreciation expense per mile = ($33,000 - $3,000) / 100,000 = $0.30

Year Miles

2016 22,000  x $0.30 = $6,600

2017 24,000   x $0.30 = $7,200

2018 15,000   x $0.30 = $4,500

2019 20,000   x $0.30 = $6,000

2020 (21,000  - 2,000) x $0.30 = $5,700