Depreciation for Partial Periods Bar Delivery Company purchased a new delivery truck for $45,000 on April 1, 2019. The truck is expected to have a service life of 10 years or 150,000 miles and a residual value of $3,000. The truck was driven 12,000 miles in 2019 and 20,000 miles in 2020. Bar computes depreciation expense to the nearest whole month. Required: Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $ 2020 $ Sum-of-the-years'-digits method 2019 $ 2020 $ Double-declining-balance method 2019 $ 2020 $ Activity method 2019 $ 2020 $ For each method, what is the book value of the machine at the end of 2019

Instructions are below.

Explanation:

Giving the following information:

Purchasing price = $45,000

Useful life = 10 years

Salvage value = $3,000

Activity base = 150,000 miles

The truck was driven 12,000 miles in 2019 and 20,000 miles in 2020.

We need to calculate the depreciation expense for 2019 and 2020.

Straight-line method:

Annual depreciation = (original cost - salvage value) / estimated life (years)

General = (45,000 - 3,000) / 10 = $4,200

2019:

Depreciation = (4,200/12) * 9 = $3,150

Book value = 45,000 - 3,150 = 41,850

2020:

Depreciation = $4,200

Book value = $37,650

Double-declining balance:

Annual depreciation = 2*[ (book value) / estimated life (years) ]

2019:

Depreciaiton = [ (2*4,200) / 12]*9 = $6,300

Book value = 35,700

2020:

Depreciation = 2*[ (35,700/10) ] = $7,140

Book value = 35,700 - 7,140 = $28,560

Activity-based:

Annual depreciation = [ (original cost - salvage value) / useful life of production in miles]*miles operated

2019:

Depreciation = [ (45,000 - 3,000) / 150,000]*12,000 = $3,360

Book value = 45,000 - 3,360 = $41,460

2020:

Depreciation = 0.28*20,000=$5,600

Book value = 41,460 - 5,600 = $35,860