On January 1 Astoria Delivery purchased a light truck to use in the business. The truck cost $27,000. It is expected to support the business for 8 years and have a salvage value of $3,000.
In the first year of operation, the truck was driven 20,000 miles. Using each of the following depreciation methods, what would be the depreciation expense recorded in the 1st, 2nd and 3rd year ?
1. straight-line
2. double-declining-balance (round the answer to two decimal places)
3. Sum of the years digits method (Please show how you arrived at your response in 1, 2 and 3)
What are your observations about the results?