Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011. The truck has an expected salvage value of $2,000 and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
(a) Compute depreciation expense for 2011 and 2012 using (1) the straight line method, (2) the units of activity method, and (3) the double declining balance method.
(b) Assume that Brainiac uses the straight line method.
(1) Prepare the journal entry to record 2011 depreciation.
(2) Show how the truck would be reported in the December 31, 2011, balance sheet.