Dave’s Pizza bought a used Toyota delivery van on January 2, 2014, for $28,600. The van was expected to remain in service for four years (154,000 miles). At the end of its useful life, Dave’s officials estimated that the van’s residual value would be $2,500. The van traveled 63,500 miles the first year, 51,000 miles the second year, 29,500 miles the third year, and 10,000 miles in the fourth year.
Requirements
1. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods discussed in this chapter. (For units-of-production and double declining-balance, round to the nearest two decimal places after each step of the calculation.)
2. Which method best tracks the wear and tear on the van?
3. Which method would Dave’s prefer to use for income tax purposes? Explain in detail why Dave’s prefers this method.