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Tia45
Oct 11, 2012, 08:21 AM
Hi, I missed a class and now I don't understand how to do this question, can someone please help me?
Okay, this is the question:

On April 30,2003,the Excel Company purchased a delivery van for $240 000. At the end of it's useful life(4yrs) it is expected to be worth $20 000. During the 4yr period,the company expects to drive the van 150,000 miles.
Required:
Calculate annual depreciation for the 4yr life of the van using:
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 milage.

I know the straight line method but I'm confused about the others. Can someone help me please, Thanks

paraclete
Oct 11, 2012, 03:44 PM
)Sum-of-the-years-digits

This presupposes there is some relationship between the life of equipment and years in service
four year life 1+2+3+4 =10 therefore depreciation will be calculated 40% in the first year, etc
3)Double Declining Balance
the declining balance method is based on the same premise but depreciation is calculated not on the capital value but on the written down value, double simply means a double charge is made in each year
4)Units of production =>using miles driven as a measure of output,and the following milage.
This assumes the unit has a finite life based on the number of ,iles driven so depreciation is in proportion to the expired life