P10-31A Determining asset cost, recording first-year depreciation, and identifying depreciation results that meet management objectives Learning Objectives 1, 2 1. Units-of-production, 12/31/16, Dep. Exp. $14,000 On January 3, 2016, Fast Delivery Service purchased a truck at a cost of $62,000. Before placing the truck in service, Fast spent $3,000 painting it, S1,500 replacing tires, and $3,500 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 year-130,000 miles in total. In deciding which depreciation method to use, Steven Kittridge, 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. 2. Fast 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 Fast uses the truck Identify the depreciation method that meets the company's objectives. P10-37B Determining asset cost, recording first-year depreciation, and identifying depreciation results that meet management objectives Learning Objectives 1, 2 1. Units-of-production, 12/31/16, Dep. Exp. $18,900 On January 3, 2016, Quick Delivery Service purchased a truck at a cost of $90,000. Before placing the truck in service, Quick spent $2,500 painting it, $1,800 replacing tires, and $4,700 overhauling the engine. The truck should remain in service for five years and have a residual value of $9,000. The truck's annual mileage is expected to be 21,000 miles in cach of the first four years and 16,000 miles in the fifth year--100,000 miles in total. In deciding which depreciation method to use, Harvey Wamer, 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. 2. Quick 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 Quick uses the truck Identify the depreciation method that meets the company's objectives