Deacon Industries purchased a delivery vehicle on January 1, 2019, for $30,000. They paid sales taxes of $2,000 and…

Deacon Industries purchased a delivery vehicle on January 1, 2019, for $30,000. They paid sales taxes of $2,000 and…

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Deacon Industries purchased a delivery vehicle on January 1, 2019, for $30,000. They paid sales
taxes of $2,000 and one year’s insurance premium of $2,000 on the same day. The company
estimated a residual value of $3,000 at the end of the five-year expected service life. Expected usage
(in miles) of the new delivery vehicle is as follows:
2019
2020
2021
2022
2023
16,000
22,000
25,000
21,000
16,000
Mileage estimates were based on expected increases in customers and the addition of a second
delivery vehicle in 2022.
What was depreciation expense of the vehicle in 2021 under the sum-of-the-years’-digits and double-
declining balance depreciation methods, respectively?

Expert Answer:

Answer rating: 100% (QA)

Sum of the Years Digits Depreciation Method Depreciable Cost Cost Residual Value 30 000 3 000 27 000
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