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On January 3, 2018, Speedy Delivery Service purchased a truck at a cost of $67,000. Before placing the truck in service, Speedy spent $3,000 painting it, $1,200 replacing tires, and $3,500 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, Alec Rivera, 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. Speedy 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 Speedy uses the truck. Identify the depreciation method that meets the company's objectives. Asset cost Date 1/3/18 $74,700.00 12/31/18 $74,700.00 12/31/19 $74,700.00 12/31/20 $74,700.00 12/31/21 $74,700.00 12/1/22 $74,700.00 Date 1/3/18 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Asset cost Straight Line Depreciation Schedule Depreciation for the Year Depreciable Depreciation Depreciation Rate Expense cost Units of Production Depreciation Schedule Depreciation for the Year Depreciation/ Number of Depreciation Expense per unit units 74,700 74,700 74,700 74,700 74,700 74,700 Accumulated Depreciation Accumulated Depreciation Book Value $74,700 Book Value $74,700 Cost Residual value Depreciable cost useful life annual depreciation Cost Residual value Depreciable cost Useful life Depreciation mile Double Declining Depreciation Schedule Depreciation for the Year Date Book Value DDB Rate 1/3/18 74,700 12/31/18 74,700 12/31/19 12/31/20 12/31/21 12/31/22 2. The depreciation method that meets the company's objective: Asset cost Depreciation Expense Accumulated Depreciation Book Value $74,700 DDB Rate 2 x straight line rate equals 2x(100/5yrs) equals 40%