Reference no: EM132794777
Wexford Co. purchased a new delivery truck at the beginning of 2017. The truck has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2017. The truck was driven 20,000 miles during 2017 and 24,000 miles during 2018. The number of expected miles over five years is 100,000.
Problem 1: Wexford Co. wants to use the depreciation method that will result in the highest depreciation expense for 2017. Which method should be used?
a. Straight-line
b. Double-declining-balance
c. Units-of-production
d. All methods create the same income in 2017.
Problem 2: McLaren Corp. incurred the following costs to acquire and prepare land during 2017 for a new parking lot: purchase price for land, $800,000; cost of paving, $40,000; and lighting for the parking lot, $20,000. How much should McLaren record in the Land Improvements account?
a. $60,000
b. $90,000
c. $30,000
d. $40,000
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What method of depreciation will produce
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