Continuing Cookie Chronicle 9 (Part Level Submission)

Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2019, and it will be ready for use on September 1, 2019. Natalie is concerned about the impact of the vans cost on her income statement and balance sheet. She has come to you for advice on calculating the vans depreciation.

Units-of activity depreciation Year Units of Activity Depreciation Expense Accumulated Depreciation Net Book Value 40,500 $ 2019 15,000 2,475 2,475 38,025 2020 45,000 7,425 9,900 30,600 2021 50,000 8.250 18,150 22,350 LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT What impact will the three methods of depreciation have on Natalie's balance sheet at December 31, 2019? What impact will the three methods have on Natalie's income statement in 2019? Straight-Line Double-declining Balance Units-of-Activity Cost of asset 40,500 40,500 40,500 Accumulated depreciation 2,200 5,400 2,475 Net book value 38,300 35,100 S 38,025 Depreciation expense s 2,200 5,400 2,475 Lowest amount of net income Double-declining method Lowest amount of stockholders' equity Double-declining method Lowest net book value Double-declining method Greatest amount of net income Straight-line method Greatest amount of stockholders' equity Straight-line method Greatest net book value Straight-line method