1. Record the transactions in Regal Freightway 5 JUNI ods (Learning din manufacturing the company said to place the equip- in decreasing by P8-46A. Capitalize long-term asset costs and several depreciation methods it Objectives 2, 3, & 9) 20-25 min. On January 3, Jose Rojo, Inc., paid $224,000 for equipment used in man automotive supplies. In addition to the basic purchase price, the compan $700 transportation charges, $100 insurance for the equipment while in tra $12,100 sales tax, and $3,100 for a special platform on which to place the ment in the plant. Jose Rojo, Inc., management estimates that the equipme remain in service for five years and have a residual value of $20,000. The ment will produce 50,000 units the first year, with annual production decres 5,000 units during each of the next four years (ie., 45,000 units in year 2 40,000 units in year 3; and so on for a total of 200,000 units). In trying to decid which depreciation method to use, Jose Rojo, Inc., requested a depreciation schedule for each of the three depreciation methods (straight-line, units-of- production, and double-declining-balance). Requirements 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 deci- mal places Long-Term Assets 431 2. Jose Rojo, Inc., prepares financial statements using the depreciation method that reports the highest income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year Jose Rojo, Inc., uses the equipment. Identify the depreciation methods that meet Jose Rojo's objec- tives, assuming the income tax authorities permit the use of any method. 3. Show how Jose Rojo, Inc., would report equipment on the December 31, 2011, balance sheet of the first year. P8-47A. Disposing of an Asset (Learning Objective 5) 15-20 min. Atco Industries had a piece of equipment that cost $25,000 and had accumulated