Help! I have attempted to work these problems but all my answers are incorrect. Can someone show me how to work these?
1. On January 1, 20X5, Better Realty purchased a $45,000 vehicle to chauffeur clients to prospective homes. Better plans on driving the vehicle for five years or 100,000 miles. Expected residual value is $10,000.
The book value of the vehicle at the end of 20X5, after recording depreciation for the year using the straight-line method is:
A. $28,000 B. $38,000 C. $36,000 D. $31,000
In attempting to follow the example of the book, my attempt was:
$45,000-10,000/5; my answer was $7,000.
I then tried 45,000-2,000/5; my answer was $8600. I tried other numbers but
none of them came close to the answer.
2. On January 1, 20X5, Better Realty purchased a $45,000 vehicle to chauffeur clients to prospective homes. Better plans on driving the vehicle for five years or 10,000 miles. Expected residual value is $10,000.
The 20X6 depreciation expense using the straight-line method is:
A. $7,500 B. $8,750 C. $2,500 D. $7,000
I selected D. $7,000 but I am unsure if that is correct.
3. On January 1, 20X5, Better Realty purchased a $45,000 vehicle to chauffeur clients to prospective homes. Better plans on driving the vehicle for five years or 10,000 miles. Expected residual value is $10,000.
Better Realty drove the vehicle 25,000 miles in 20X7. The depreciation expense for 20X7 using the units-of-production method is:
A. $6,480 B. $2,850 C. $6,200 D. $8,750
I attempted to answer this one: $45,000-10,000/25,000 mi = 1.4 but I could not figure out what I was supposed to multiply by 1.4.
Help please!