On

January

1,

2018,

On Time

Delivery Service purchased a truck at a cost of

$75,000.

Before placing the truck in service,

On Time

spent

$2,200

painting it,

$1,700

replacing tires, and

$9,100

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

year120,000

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

LOADING...

.

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
	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			/		=

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.