On January 3, 20X1. Dobb Automotive Company paid $224.000 for equipment used in manufacturing automotive supplies. In addition to the basic purchase price, the company paid $700 transportation charges. $100 insurance for the equipment while in transit. $12.100 sales tax. and $3,100 for a special platform on which to place the equip- ment in the plant. Dobb management estimates that the equipment will remain in service five years and have a residual value of $17,000. The equipment will produce 50.000 units the first year, with annual production decreasing by 5,000 units during each of the next four years (that is, 45.000 units in year 2; 40.000 units in year 3; and so on). In trying to decide which depreciation method to use, Jacqueline Dobb has requested a depreciation schedule for each of three depreciation methods (straight-line. units-of-production, and double-declining-balance). Required 1. For each depreciation method, prepare a depreciation schedule showing asset cost. depreciation expense, accumulated depreciation, and asset book value. For the units-of- production method, round depreciation per unit to three decimal places. 2. Dobb reports to stockholders and creditors in the financial statements using the depreci- ation method that maximizes reported income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income tax pay- ments in those early years. Consider the first year Dobb uses the equipment. Identify the depreciation methods that meet Dobb's objectives, assuming the income tax authorities permit the use of any of the methods. 3. Assume that cash provided by operations before income tax is $180.000 for the equip- ment's first year. The combined federal and state income tax rate is 40%. For the two depreciation methods identified in requirement 2. compare the net income and cash pro- vided by operations (cash flow). Show which method gives the net-income advantage and which method gives the cash-flow advantage.