Flowers 2 U, Inc. is thinking of buying a van that will be used only for business. The cost of the van is estimated at $34,000. They would spend an additional $2,800 to have the van painted. In addition, they want the back seat of the van removed so that there will be plenty of room to transport large floral arrangements. The cost of taking out the back seat and installing shelving units is estimated at $1,200. They expect the van to last about 6 years, and they expect to drive it for 250,000 miles. The annual cost of vehicle insurance will be $2,400. They estimate that at the end of the 5-year useful life the van will sell for $7,000. Assume the van is purchased on August 15, 2022, and it will be ready for use on September 1, 2022.

Required

1. Determine the cost of the van.
2. Prepare three depreciation tables: one for straight-line depreciation, one for double-declining balance depreciation, and one for units-of-activity depreciation. For units-of-activity, you estimate you will drive the van as follows: 20,000 miles in 2022; 65,000 miles in 2023; 60,000 miles in 2024; 55,000 miles in 2025; 50,000 miles in 2026. Your business has a December 31 year-end.
3. What impact will the three methods of depreciation have on the business's balance sheet on December 31, 2022? What impact will the three methods have on the income statement in 2022?
4. What impact will the three depreciation methods have on the company's income?
5. What method of depreciation would you use and why?