Exercise 107 Linton Company purchased a delivery truck for 2

Exercise 10-7 Linton Company purchased a delivery truck for $26,000 on January 1, 2017. The truck has an expected salvage value of $1,300, and is expected to be driven 100,000 miles over its estimated useful life of 9 years. Actual miles driven were 12,800 in 2017 and 12,000 in 2018. Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation expense 25 per mile

Solution

3) Declining Balance Method

Rate of Depreciation =1 - ( Salvage Value)^1/9

Purchase Price

= 1 - (1300/26000)^1/9

= 28.31%

Depreciation in 2017 = 26000 * 28.31% = $ 7360.6

WDV as on 2017 end = 26000 - 7360.6 = $ 18639.40

Depreciation in 2018 = 18639.40 * 28.31% = $ 5276.81