On January 2, 2018, Chyler Enterprises, Inc., paid $254,600 for equipment used in manufacturing automotive supplies. In addition to the basic purchase price, the company paid $700 for transportation charges, $500 for insurance for the equipment while in transit, $12,000 sales tax, and $2,200 for a special platform on which to place the equipment in the plant. Management of Chyler Enterprises, Inc., estimates that the equipment will remain in service for five years and have a residual value of $30,000. The equipment will produce 60,000 units the first year, with annual production decreasing by 10,000 units during each of the next four years (i.e., 50,000 units in year 2; 40,000 units in year 3; and so on, for a total of 200,000 units). In trying to decide which depreciation method to use, Chyler Enterprises, Inc., requested a depreciation schedule for each of the three depreciation methods (straight-line, units of production, and double-declining balance). Requirement 1. For each depreciation method, prepare a depreciation schedule showing asset cost, depreciation expense, accumulated depreciation, and asset book value for each year of the asset's life. For the units of production method, round depreciation per unit to three decimal places. Before completing the straight-line depreciation schedule, calculate the straight-line depreciation rate. One year 1 Useful life (SL) Depreciation rate Complete the Straight-Line Depreciation Schedule. Begin by filling out the schedule through 2019, and then complete the schedule by entering the amounts through 2022. Straight-Line Depreciation Schedule Date January 2, 2018 December 31, 2018 Asset Cost Rate Cost Depreciation Depreciable Depreciation Accumulated Expense Depreciation Book Value Asset December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Before completing the units of production (UOP) depreciation schedule, calculate the depreciation expense per unit. (Round depreciation per unit to three decimal places.) Depreciable Total unit cost output Depreciation per unit Complete the Units of Production Depreciation Schedule. Begin by filling out the schedule through 2019, and then complete the schedule by entering the amounts through 2022. (Enter depreciation per unit to three decimal places.) Units of Production Depreciation Schedule Date Asset Cost Depreciation Per Unit Units Number of Depreciation Accumulated Expense Depreciation Book Value Asset January 2, 2018 December 31, 2018| December 31, 2019 December 31, 2020| December 31, 2021 December 31, 2022 Before completing the double-declining balance (DDB) schedule, calculate the double-declining balance rate. SL Depreciation DDB rate rate multiplier DDB rate Complete the Double-Declining Balance Depreciation Schedule. Begin by filling out the schedule through 2019, and then complete the schedule by entering the amounts through 2022. Double-Declining Balance (DDB) Depreciation Schedule DDB Date Asset Cost Rate January 2, 2018 December 31, 2018 December 31, 2019 December 31, 2020| December 31, 2021 December 31, 2022 Asset Book Value Depreciation Expense Accumulated Depreciation Asset Book Value Requirement 2. Chyler Enterprises, Inc., prepares financial statements using the depreciation method that reports the highest income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year Chyler Enterprises, Inc., uses the equipment. Identify the depreciation methods that meet Chyler Enterprises' objectives, assuming the income tax authorities permit the use of any method. The depreciation method that maximizes reported net income in the first year of the computer's life is the method, which produces the depreciation for that year. The method that minimizes income taxes in the first year is the method, which produces the depreciation amount for that year. Requirement 3. Show how Chyler Enterprises, Inc., would report equipment on the December 31, 2018, balance sheet for each depreciation method. December 31, 2018: SL UOP DDB