More info On January 3, 2018, Tucker Enterprises, Inc., paid $280,300 for equipment used in manufacturing automotive supplies. In addition to the basic purchase price, the company paid $1,000 for transportation charges, 5700 for insurance for the equipment while in transit, $10,500 sales tax, and $2,500 for a special platform on which to place the equipment in the plant. Management of Tucker Enterprises, Inc., estimates that the equipment will remain in service for five years and have a residual value of $35,000. The equipment will produce 60,000 units the first year, with annual production decreasing by 5,000 units during each of the next four years (i.e., 55,000 units in year 2, 50,000 units in year 3; and so on, for a total of 250,000 units). In trying to decide which depreciation method to use, Tucker Enterprises, Inc., requested a depreciation schedule for each of the three depreciation methods (straight-line, units of production, and double-declining balance). Print Done Consider the following: i (Click the icon to view the information.) Read the requirements Requirement 1. For each depreciation method, prepare a depreciation schedule showing asset cost, depreciation expense, accumulated depreciation, and asset book value for each year of the asset's life. For the units of production method, round depreciation per unit to three decimal places. Before completing the straight-line depreciation schedule, calculate the straight-line depreciation rate. One year 1 Useful life = (SL) Depreciation rate 1 = Complete the Straight-Line Depreciation Schedule. Begin by filling out the schedule through 2019, and then complete the schedule by entering the amounts through 2022. Straight-Line Depreciation Schedule Depreciation Depreciable Depreciation Accumulated Asset Rate Cost Expense Depreciation Book Value Date Asset Cost January 3, 2018 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Before completing the units of production (UOP) depreciation schedule, calculate the depreciation expense per unit. (Round depreciation per unit to three decimal places.) Depreciable Total unit cost 1 output Depreciation per unit / Complete the Units of Production Depreciation Schedule. Begin by filling out the schedule through 2019, and then complete the schedule by entering the amounts through 2022. (Enter depreciation per unit to three decimal places.) Units of Production Depreciation Schedule Depreciation Number of Depreciation Accumulated Asset Cost Per Unit Expense Depreciation Asset Date Units Book Value January 3, 2018 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Before completing the double-declining balance (DDB) schedule, calculate the double-declining balance rate. DDB rate SL Depreciation rate X multiplier DDB rate Complete the Double-Declining Balance Depreciation Schedule. Begin by filling out the schedule through 2019, and then complete the schedule by entering the amounts through 2022. Double-Declining Balance (DDB) Depreciation Schedule DDB Asset Book Depreciation Accumulated Asset Cost Value Expense Depreciation Asset Date Rate Book Value January 3, 2018 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Requirement 2. Tucker Enterprises, 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 Tucker Enterprises, Inc., uses the equipment. Identify the depreciation methods that meet Tucker Enterprises objectives, assuming the income tax authorities permit the use of any method. v method, which produces the v depreciation for that year. The method that minimizes income taxes in the first year is the method, which produces the The depreciation method that maximizes reported net income in the first year of the computer's life is the depreciation amount for that year. Requirement 3. Show how Tucker Enterprises, Inc., would report equipment on the December 31, 2018, balance sheet for each depreciation method. SL December 31, 2018: UOP DDB