Option #1: Computing and RecordingDepreciation
Two Brother’s Moving Company purchased a group of new movingtrucks for a total amount of $125,000. The vehicles are expected tolast five years due to the heavy use and have are sidual/scrap/salvage value of $10,000 at the end of that life.Usage of the vehicle is tracked in miles and the vehicles in totalare expected to last 2,000,000 miles. During year one 750,000 mileswere used, during year two 600,000 miles were used, during yearthree 500,000 miles were used, during year four no miles were useddue to a temporary closing of the moving line of business, andduring year five 150,000 miles were used. Using the depreciationtemplate provided, determine the amount of depreciation expense forthe third year under each of the following assumptions:
- The company uses the straight-line method of depreciation.
- The company uses the units-of-production method ofdepreciation.
- The company uses the double-declining-balance method ofdepreciation.
- Assuming straight line depreciation, prepare the journal entryfor the third year.
- Assume the company sold the vehicles at the end of the fourthyear for $50,000. Prepare a journal entry for asset disposal in thefourth year.
- Assume you are the chief accountant of this company. Determinehow you will choose, based on best industry practices, thedepreciation method for them to use.
Your response to Part 4 should be at least one page and mustinclude title and reference pages. In addition, your paper must beformatted according to the CSU-Global Guide to Writing and APA.(Links to an external site.)Links to an external site.Review thegrading rubric to understand how you will be graded on thisassignment. Reach out to your instructor if you have questionsabout the assignment.