Answer the ten (10) questions given the following data set: ABC purchases a new delivery truck on January 1, 2022. The cost of the truck is $40,000. The truck is expected to last for five (5) years and at that time have a salvage (residual) value of $5,000. After two (2) years, ABC believes it will now have the delivery truck for a total of 8 years and after that time, the truck will have a $2,000 salvage (residual) value. After 6 years, ABC sells the truck for $6,000. For Question 1-9, assume that ABC uses the straight line method of depreciation.

1. What is the Year 1 Depreciation Expense?

2. What is the impact on net income in Year 1 as a result of the events described?

3. What is the Year 2 depreciation expense?

4. What is the impact on cash flow in Year 2 as a result of the events described?

5. What is the Year 3 depreciation expense?

6. What is the Net Book Value of the Delivery Truck AFTER 3 Years?

7. What is the Net Book Value of the Delivery Truck AFTER 6 Years?

8. What is the balance in Accumulated Depreciation of the Delivery Truck AFTER 6 Years (immediately prior to the sale)?

9. What is the gain/(loss) on the sale of the Delivery Truck?

10. If ABC had use the double declining balance method of depreciation (the accelerated method), what would the depreciation expense be for Year 1?