solution

Computing and recording units-of-production depreciation

McNabb Corporation purchased a delivery van for $25,500 in 2012. The firm’s financial condition immediately prior to the purchase is shown in the following horizontal statements model:

The van was expected to have a useful life of 150,000 miles and a salvage value of $3,000. Actual mileage was as follows:

Required

a. Compute the depreciation for each of the three years, assuming the use of units-of-production depreciation.

b. Assume that McNabb earns $21,000 of cash revenue during 2012. Record the purchase of the van and the recognition of the revenue and the depreciation expense for the first year in a fi nancial statements model like the preceding one.

c. Assume that McNabb sold the van at the end of the third year for $4,000. Calculate the amount of gain or lose from the sale.

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"
Looking for a Similar Assignment? Our Experts can help. Use the coupon code SAVE30 to get your first order at 30% off!

Hi there! Click one of our representatives below and we will get back to you as soon as possible.

Chat with us on WhatsApp