Use of a single asset account or separate asset accounts affects classification of expenditures as repairs or improvements. Assume that Checkers Pizza Company purchased a delivery truck for $18,000 at the start of Year 1. It expected the truck to last for four years, but the engine requires replacement at the end of Year 2 at a cost of $5,000. Checker's must choose between depreciating the truck as a single unit or as two separate assets—the engine and the rest of the truck. The company uses straight-line depreciation for financial reporting.

a. Compute total expense for each of the four years of the truck's life, depreciating the entire cost of $18,000 in a single asset account.

b. Compute total expense for each year of the truck's life, depreciating the engine and the rest of the truck in separate asset accounts.

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