Question 1 - Carter's Trucking Company purchases a delivery van for $49,000. Carter's estimates that at the end of its 5 year service life, the van will be worth $14,500. During the five-year period, the company expects to drive the van 138,000 miles.
Actual miles driven each year were 31.000 miles in year 1; 25,000 miles in year 2; 27,000 miles in year 3; 30.000 miles in year 4; and 29.000 miles in year 5. Note that actual total miles of 142,000 exceed expectations by 4,000 miles.
Required: Calculate annual depreciation and the book value and the end of each year for the five-year life of the van using each of the following methods. (Do not round your intermediate calculations.)
1. Straight-line.
2. Activity-based
Question 2 - On January 1, 2018, Weaver Corporation purchased a patent for $267,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2020, the company incurred legal fees of $87,000 in successfully defending a patent infringement suit. The successful defense did not change the company's estimate of useful life. Weaver Corporation's year-end is December 31.
What is the balance in the Patent account at the end of 2020?