Calculate depreciation expense: straight-line and activity methods.
Walt's Water Pressure Company purchased a van for $45,000 on July 1, 2008. The van had an estimated useful life of 6 years or 250,000 miles. Walt's estimated the van's salvage value to be $3,000. The van was driven 25,000 miles in the year ended June 30, 2009, and 30,000 miles in the year ended June 30, 2010.
a. Compute the depreciation expense for 2009 and 2010, first using the straight-line method, then the activity method.
b. Which method portrays more accurately the actual use of this asset? Explain your answer.