Calculate and analyze depreciation under alternative methods. (LO 2)

Federal Express purchased a new truck on January 1, 2007, at a cost of \(\$ 100,000\). The estimated useful life is 5 years with a salvage value of \(\$ 10,000\).

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a. Prepare two different depreciation schedules for the truck-one using the straight-line method, and the other using the double-declining balance method.

(Round to the nearest dollar.)

b. Determine which method would result in the greatest net income for the year 2007 .

c. (Appendix) How would taxes affect management's choice between these two methods for the financial statements?