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ACC 291 Wiley PLUS Week 3 Assignment Exercise E9-7

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ACC 291 Wiley PLUS Week 3 Assignment Exercise E9-7
Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011. The truck has an
expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated
useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
Correct.
Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the
units-of-activity method, and (3) the double-declining balance method. (Round cost per mile
to 2 decimal places, e.g. 10.50. Use rounded amount for future calculations. Round final
answers to 0 decimal places, e.g. 125.)
2011 2012
Straight-line $ 3500 $ 3500
Units-of-Activity $ 4200 $ 3360
Double-declining Balance $ 7500 $ 5625
Correct.
(1) 2011: ($30,000 - $2,000)/8 = $3,500
2012: ($30,000 - $2,000)/8 = $3,500
(2) ($30,000 - $2,000)/100,000 = $0.28 per mile
2011: 15,000 X $0.28 = $4,200
2012: 12,000 X $0.28 = $3,360
(3) 2011: $30,000 X 25% = $7,500
2012: ($30,000 - $7,500) X 25% = $5,625
Assume that Brainiac uses the straight-line method. (1) Prepare the journal entry to record 2011
depreciation. (2) Show how the truck would be reported in the December 31, 2011, balance
sheet. (Enter all amounts as positive amounts and subtract where necessary.)

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Account/Description Debit Credit
Depreciation expense 3500
Acc. dep.-Delivery truck 3500
Delivery truck $ 30000
Less: Accumulated depreciation
3500
$ 26500

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