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PROBLEM 9.7B Alternative Depreciation Methods Haywood, Inc., purchased a truck to use for deliveries...

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Accounting

PROBLEM 9.7B Alternative Depreciation Methods

Haywood, 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 $24,000 and is expected to have a value of $6,000 at the end of its 6-year life. The truck is expected to be used at the rate of 15,000 miles in the first year, 20,000 miles in the second and third years, and 12,000 miles in each of the fourth, fifth, and sixth years.

Instructions

  1. Determine the amount of depreciation expense that would be recognized under each of the following depreciation methods in the first and second years of the trucks useful life. A full years depreciation will be recognized in the first year the truck is used.
    1. Straight-line.
    2. Double-declining-balance.
    3. Units-of-output (based on miles).

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