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Depreciation for Excel Delivery and Allegheny Corporation

E 11-1. On January 1, 2011, 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 van using each of the following methods. Round all computations to the nearest dollar.
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
2011 22,000
2012 24,000
2013 15,000
2014 20,000
2015 21,000

E11-3
On October 1, 2011, the Allegheny Corporation purchased machinery for $115,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. The machine is expected to produce 220,000 units during its life.

Required

Calculate depreciation for 2011 and 2012 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Round all computations to the nearest dollar.

1. Straight line
2. Double-declining balance
3. Units of production (units produced in 2011, 10,000; units produced in 2012, 25,000)

Solution Summary

The expert calculates depreciation for Excel Delivery and Allegheny Corporations.

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