Posted: July 12th, 2016
Calculating depreciation has proved problematic for me and I need some assistance.
On January 1, 2010, a taxi company purchased a new cab at a cost of $25,000. The estimated salvage value of the cab is $5,000, and the cab’s useful life is 5 years. The new cab will be driven an estimated 100,000 miles.
a) Write the journal entry to record depreciation on the machine for 2012 using the double declining-balance method of depreciation
b) Compute the net book value of the cab at the end of 2012 if the units of production method is used and the actual miles driven during the life of the cab were as follows:
2010 22,000 2013 21,000
2011 29,000 2014 25,000
d) Record the journal entry for the sale of the cab on January 1, 2014 for $7,700 in cash if the company used straight line depreciation.
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