On January 1, 2010, the super fast subs company purchased a delivery automobile for $31,000. The estimated useful life of the vehicle is five years, and the estimated salvage value is 1,000. The company expects the automobile to be driven 200,000 miles during its service life. Actual miles driven were:
Year Miles
2010 35,000
2011 40,000
2012 45,000
2013 39,000
2014 41,000
Requirements
1. Calculate the depreciation expense for each year of the five-year-life of the automobile using the following methods. (Round your answers to the nearest dollar.)
a, Straight-line method
b. Double-declining balance method
c. Activity method
2. How does the choice of depreciation methods affect net income in each of the years? How does the choice of depreciation methods affect the balance sheet in each of the years?
Sheet3 Sheet2 Sheet1 A B C D E G H Name Section F End of Problem Data Input Section: Estimated residual value Estimated useful life Depreciation Expense Per Year Double Straight Declining Year Line Balance Helpful Hint: Use the following functions to calculate depreciation =SLN(cost,salvage,life) =DDB(cost,salvage,life,period) Activity Method Output Section: Problem 6-70A Super Fast Subs Company Cost of asset, January 1, 2010 Miles driven Total miles driven over life of equipment Cost per mile (cost-residual/units) Part 1. Part 2. Amount Formula 1 Formula 2 Formula 3 Formula 4 Formula 5 Formula 6 Formula 7 Formula 8 Formula 9 Formula 10 Formula 11 Formula 12 Formula 13 Formula 14 Formula 15 Formula 16 Type answer starting here Reimers, Financial Accounting 3e 5.00 6.00 7.00 8.00 9.00 10.00 11.00 2010.00 12.00 2011.00 13.00 2012.00 14.00 2013.00 15.00 2014.00 16.00 17.00 18.00 19.00 20.00 21.00 22.00 23.00 2010.00 24.00 2011.00 25.00 2012.00 26.00 2013.00 27.00 2014.00 28.00 $0.00 $0.00 $0.00 29.00 30.00 31.00 32.00 33.00 34.00 35.00 36.00 37.00 38.00 39.00 40.00 41.00 42.00 CyberCoach: Enter the following formula: =(H7-H8)/H16 CyberCoach: Enter the following formula: =G11*$H$17 Then copy down CyberCoach: You have to enter this amount manually. Sheet3 Sheet2 Sheet1 A B C D E G H Name Section F End of Problem Data Input Section: Estimated residual value Estimated useful life Depreciation Expense Per Year Double Straight Declining Year Line Balance Helpful Hint: Use the following functions to calculate depreciation =SLN(cost,salvage,life) =DDB(cost,salvage,life,period) Activity Method Output Section: Problem 6-70A Super Fast Subs Company Cost of asset, January 1, 2010 Miles driven Total miles driven over life of equipment Cost per mile (cost-residual/units) Part 1. Part 2. Amount Formula 1 Formula 2 Formula…
Attachments:
p06-70a.xls