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 $4,000 painting it, $1,200 replacing tires, and $2,800 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 year130,000 miles in total. In deciding which depreciation method to use, Jacob Nealy, 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. 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 Asset Accumulated Book Date Cost Cost Life Expense Depreciation Value 1-1-2018 12-31-2018 12-31-2019 .. IL LILL 12-31-2020 12-31-2021 + 12-31-2022 11 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 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 Depreciation Number of Accumulated Book Depreciation Expense Date Cost Per Unit Units Depreciation Value 1-1-2018 12-31-2018 II 12-31-2019 x 12-31-2020 = 12-31-2020 12-31-2021 II 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 Depreciation for the Year Asset Book DDB Accumulated Book Depreciation Expense Date Cost Value Rate Depreciation Value 1-1-2018 12-31-2018 X 12-31-2019 X II 12-31-2020 X X 12-31-2021 II 12-31-2021 II 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. method. It produces the depreciation expense and therefore The depreciation method that reports the highest net income in the first year is the the highest net income