On January 1, 2016, Swifty Delivery Service purchased a truck at a cost of $75,000. Before placing the truck in service, Swifty spent $2,200 painting it, $500 replacing tires, and $10,300 overhauling the engine. The truck should remain in service for five years and have a residual value of $10,000. The truck's annual mileage is expected to be 27,000 miles in each of the first four years and 12,000 miles in the fifth year-120,000 miles in total. In deciding which depreciation method to use, Andy Sargeant, the general manager requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance) Read the requirements Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Swifty prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. Consider the first year that Swifty uses the truck. Identify the depreciation method that meets the company's objectives, Print Done Done Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Begin by preparing a depreciation schedule using the straight-line method. Straight-Line Depreciation Schedule Depreciation for the Year Depreciable Useful Depreciation Cost Life Expense Asset Cost Book Accumulated Depreciation Date Value 1-1-2016 12-31-2016 12-31-2017 12-31-2018 12-31-2019 12-31-2020 Before completing the units-of-production depreciation schedule, calculate the depreciation expense per unit. (Round depreciation expense per unit to two decimal places.) Depreciation per unit Accumulated depreciation Cost Residual value Useful life in units Useful life in years Prepare a depreciation schedule using the units-of-production method. (Enter the depreciation per unit to two decimal places, $X.XX.)! Book Accumulated Depreciation Cost Value Units-of-Production Depreciation Schedule Depreciation for the Year Asset Depreciation Number of Depreciation Date Per Unit Units Expense 1-1-2016 12-31-2016 12-31-2017 12-31-2018 12-31-2019 12-31-2020 Prepare a depreciation schedule using the double-declining-balance (DDB) method. (Round depreciation expense to the nearest whole dollar.). Accumulated Depreciation Book Value Double-Declining Balance Depreciation Schedule Depreciation for the Year Asset Book DDB Depreciation Date Cost Value Rate Expense 1-1-2016 12-31-2016 12-31-2017 12-31-2018 12-31-2019 12-31-2020 Requirement 2. Swifty prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use Consider the first year that Swifty uses the truck. Identify the depreciation method that meets the company's objectives method. It produces the The depreciation method that reports the highest net income in the first year is the depreciation expense and therefore the highest net income double-declining-balance straight-line ne in the early years of asset use. units-of-production S. method. It produces the the depreciation method that reports the highest net income in the early years of asset use. ne depreciation method that meets the company's objectives. ne in the first year is the method. It produces the highest elds and then continue to the next question. lowest
