On January 2, 2013, Preston Corporation Purchased a Delivery Truck

Essay

On January 2, 2013, Preston Corporation purchased a delivery truck for $46,000. The estimated useful life of the truck is 5 years, with an estimated salvage value of $8,000. The truck is expected to be driven 200,000 miles during its useful life.
Required:
a) If Preston uses double-declining balance depreciation, what is the amount of depreciation for 2014? What is the balance of the accumulated depreciation account at the end of 2014 after adjusting entries have been made?
b) Refer to part a. Assume Preston used DDB depreciation and sold the truck at the beginning of 2015 for $18,000. What is the amount of the gain or loss on the sale of the delivery van?
c) Prepare the journal entry to record the sale in part (b).
d) Assume that Preston used units-of-production depreciation, instead of the DDB in part a. The delivery van was driven 50,000 miles the first year and 40,000 miles the second year. What is the amount of depreciation expense for 2013 and for 2014? What is the book value of the van at the end of 2014?