On January 1, 2018, On Time Delivery Service purchased a truck at a cost of $ 67,000. Before placing the truck in service, On Time spent $ 3,000 painting it, $ 2,500 replacing tires, and $ 2,200 overhauling the engine. The truck should remain in service for five years and have a residual value of $ 5,100. The truck's annual mileage is expected to be 20,000 miles in each of the first four years and 12,800 miles in the fifth year - 92,800 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).

Requirements:

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.

-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.

-Prepare a depreciation schedule using the units-of-production method.

-Prepare a depreciation schedule using the double-declining-balance (DDB) method

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 (Double-declining-balance / straight-line / units of production) method. It produces the (highest / lowest) depreciation expense and therefore the highest net income.