Paper Details
Garns Photography Company purchased a new car on July 1, 2011, for $26,000. The estimated life of the car was five years or 110,000 miles, and its salvage value was estimated to be $1,000. The car was driven 9,000 miles in 2011 and 24,000 miles in 2012.
1. Compute the amount of depreciation expense for 2011 and 2012 using the following methods:
a. Straight-line
b. Units-of-production
2. Which depreciation method more closely reflects the used-up service potential of the car? Explain.
