On

January

2016 Swifty

Delivery Service purchased a truck at a cost of

$75,000.

Before placing the truck in?service,

Swiftyy

spent

$3,000

painting?it,

$600

replacing?tires, and

$9,400

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

yearlong dash?120,000

miles in total. In deciding which depreciation method to?use,

Harvey Warnerthe 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 Date 1-1-2016 12-312016 12-312017 12-312018 12-312019 12-312020 Asset Cost Depreciation for the Year Depreciable Depreciation Depreciation Accumulated Cost Rate Expense Depreciation / = / = / = / = / = Book Value Before completing the units-of-production depreciation schedule, 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 Date 1-1-2016 12-312016 12-312017 12-312018 12-312019 12-312020 Asset Cost Depreciation for the Year Depreciation Number of Depreciation Accumulated Per Unit Units Expense Depreciation x = x = x = x = x = Book Value Prepare a depreciation schedule using the double-declining-balance (DDB) method. (Round depreciation expense to the nearest whole dollar.) Double-Declining-Balance Depreciation Schedule Date 1-1-2016 12-31-2016 12-31-2017 12-31-2018 12-31-2019 12-31-2020 Asset Cost Depreciation for the Year Book DDB Depreciation Accumulated Value Rate Expense Depreciation x x x x Book Value = = = = Requirement 2. SwiftySwifty 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 SwiftySwifty 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