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UOP Pizza bought a used Chevy delivery van on January 2, 2016 for $22,800. The van was expected to remain in service for four years (48,750 miles). At the end of its useful life, UOP officials estimated that the van’s residual value would be $2,500. The van traveled 15,000 miles the first year, 17,000 miles the second year, 12,500 miles the third year, and 4,250 miles in the fourth year.
Prepare a schedule of depreciation expense per year for the van under the three depreciation methods. Which method best tracks the wear and tear on the van? Which method would UOP prefer to use for income tax purposes? Explain in detail why UOP would prefer this method.
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