BagODonuts Company purchased the used delivery truck on January 1, 2010, for $19,200. Van was expected to remain in service four years (30,000 miles). BagODonuts' accountant evaluated that truck's residual value would be $2,400 at the end of useful life. Truck traveled 8,000 miles first year, 8,500 miles second year, 5,500 miles third year, and 8,000 miles in fourth year.
a) Compute depreciation expense for truck for each year (2010-2013) using:
i. Straight-line method.
ii. Double-declining balance method.
iii. Units of Production method.
(For units-of-production and double-declining balance, round to nearest two decimals after every step of calculation.)
b) Which method best tracks wear and tear on van?
c) Which method BagODonuts prefer to use for income tax purposes? Describe in detail why BagODonuts prefers this method.