On January 1, 2018, Fast Delivery Service purchased a truck at a cost of $90,000. Before placing the truck in service, Fast spent $4,000 painting it, $1,200 replacing tires, and $3,800 overhauling the engine. The truck should remain in service for five years and have a residual value of $9,000. The truck's annual mileage is expected to be 21,000 miles in each of the first four years and 16,000 miles in the fifth year100,000 miles in total. In deciding which depreciation method to use, Carl Thomas, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance).

Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value.

Straight-Line Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciable		Useful		Depreciation	Accumulated	Book
Date	Cost	Cost		Life		Expense	Depreciation	Value
1-1-2018
12-31-2018					=
12-31-2019					=
12-31-2020					=
12-31-2021					=
12-31-2022					=

Before completing the units-of-production depreciation schedule, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation expense per unit. (Round depreciation expense per unit to two decimal places.)

(		-		)		=	Depreciation per unit
(		-		)		=

Prepare a depreciation schedule using the double-declining-balance (DDB) method. (Round depreciation expense to the nearest whole dollar.)

Requirement 2.

Fast 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 Fast uses the truck. Identify the depreciation method that meets the company's objectives. The depreciation method that reports the highest net income in the first year is the (double-declining-balance/ straight-line / units-of-production method). It produces the (highest / lowest) depreciation expense and therefore the highest net income.