On January 1, 2018, On Time Delivery Service purchased a truck at a cost of $62,000. Before placing the truck in service, On Time spent $2,500 painting it, $1,200 replacing tires, and $4,300 overhauling the engine. The truck should remain in service for five years and have a residual value of $5,000. The truck's annual mileage is expected to be 28,000 miles in each of the first four years and 18,000 miles in the fifth year -- 130,000 miles in total. In deciding which depreciation methods to use, Mitch Halstrom, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance).

i Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. 2. On Time 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 On Time uses the truck. Identify the depreciation method that meets the company's objectives. Print Done Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and a value Begin by preparing a depreciation schedule using the straight-line method. Straight-Line Depreciation Schedule Asset Cost Depreciation for the Year Depreciable Useful Depreciation Life Expense Cost Accumulated Depreciation Book Value Date 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.) SAT - Depreciation per unit Prepare a depreciation schedule using the units-of-production method. (Enter the depreciation per unit to two decimal places, $X.XX.) Units-of-Production Depreciation Schedule Depreciation for the Year Asset Cost Depreciation Per Unit Number of Units Depreciation Expense Accumulated Depreciation Book Value Date 1-1-2018 12-31-2018 12-31-2019 12-31-2020 12-31-2021 12-31-2022 Prepare a depreciation schedule using the double-declining-balance (DDB) method. (Round depreciation expense to the nearest whole dollar) Double-Declining-Balance Depreciation Schedule Asset Cost Book Value Depreciation for the Year DDB Depreciation Rate Expense Accumulated Depreciation Book Value Date 1-1-2018 12-31-2018 12-31-2019 12-31-2020 12-31-2021 12-31-2022 Requirement 2. On Time 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 On Time 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 and therefore the highest net income. method. It produces the depreciation expense