Meteor Delivery Services operates a delivery and messenger service in the metropolitan area and

surrounding state of a major city located in the southern US. Meteor delivers a large variety of

things, from materials, products, medical supplies, printed material, auto parts, office supplies,

computer parts, home health products, audio/video equipment, gifts, lab results, and legal,

accounting and architectural documents. Meteor's services include warehousing & distribution.

Meteor's delivery fleet includes cars, pickups, vans and trucks. In addition, the company uses

professionally trained bicyclists and walkers to handle many of its downtown

deliveries. Meteor's accounting policies for its delivery fleet are:

It states property and equipment on the basis of cost.

For financial reporting purposes, it records depreciation of property and equipment on a

straight-line basis over the asset's service life or related lease term. For income tax

purposes, it computes depreciation using accelerated methods.

It capitalizes expenditures for major additions, improvements, modifications and

overhaul costs when it determines such costs extend the useful life of the asset. It

charges to expense as incurred maintenance and repair expenditures.

It reviews the carrying value of long-lived assets for potential impairment on a periodic

basis and whenever events or changes in circumstances indicate the carrying value of an

asset may not be recoverable. Impairment is determined by comparing projected

undiscounted cash flows to be generated by the asset to its carrying value. If an

impairment is identified, a loss is recorded equal to the excess of the asset's net book

value over its fair value, and the cost basis is adjusted.

The company's delivery fleet includes approximately 50 Ford Econoline Cargo vans (E-150 3

door with 4.6L 8 cylinder engines), which it depreciates using a five-year useful life. Current

balance sheet information on its Ford vans is as follows (dollars in thousands):

Cost $1,127

Accumulated depreciation 521

Net book value $606

REQUIRED

1. Assume that Meteor purchases a new Ford Econoline Cargo van, paying $23,940. The

company estimates that the salvage value of this van after five years of delivery use will be

$5,100. Create an Excel line graph that displays the expected annual depreciation expense

and the net book value associated with the new Ford Econoline van over its 5-year life

assuming each of the following depreciation methods:

a. Straight-line;