Question

This Question: 1 pt This Quiz: 2 pts possible 2 of 2 (1 complete) On January 3, 2018, Nimble Delivery Service purchased a truck at a cost of $90,000. Before placing the truck in service, Nimble spent $3,000 painting it, $1,200 replacing tires, and $4,800 overhauling the engine. The truck should remain in service for five years and have a residual value of $9,000. The truck's annual milenge is expecteed to be 21,000 miles in each of the first four years and 16,000 miles in the fith year-100,000 miles in total. In deciding which depreciation method to use, Mikail Johnson, the general mansger, requests a depreciation schedule for each of the deprecistion methods (straight-line, units-of-production, and double-declining-balance) Read the requirements. Requilrement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciasion expense, acoumulated depreciation, and asset book value. Begin by preparing a depreciation schedule using the straight-ine method Straight-Line Depreciation Schedule Depreciation for the Year Asset Depreciable Useful Depreciation Accumulated Book Date Cost Cost Life Expense Depreciation Value 1-3-2018 12-31-2018 12-31-2019 12-31-2020 12-31-2021 12-31-2022 Choose from any list or enter any number iIn the input flelds and then continue to the next question

Answer 1

a. Cost of Truck= 90000+3000+1200+4800=99000

Straight-Line Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciable		Useful Life		Depreciation	Accumulated	Book
Date	Cost	Cost				Expense	Depreciation	Value
1/2/2018	$99,000.00
12/31/2018		$90,000.00	/	5	=	$18,000.00	$18,000.00	$81,000.00
12/31/2019		$90,000.00	/	5	=	$18,000.00	$36,000.00	$63,000.00
12/31/2020		$90,000.00	/	5	=	$18,000.00	$54,000.00	$45,000.00
12/31/2021		$90,000.00	/	5	=	$18,000.00	$72,000.00	$27,000.00
12/31/2022		$90,000.00	/	5	=	$18,000.00	$90,000.00	$9,000.00
Depreciable cost =99000-9000

Depreciation per Unit = (Original Cost- Salvage Value)/ Estimated Life

=(99000-9000)/100000 Mileager=$0.9

Units-of-Production Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciation		Number of		Depreciation	Accumulated	Book
Date	Cost	Per Unit		Mileage		Expense	Depreciation	Value
1/2/2018	$99,000
12/31/2018		0.9	x	21000	=	$18,900	$18,900	$80,100.00
12/31/2019		0.9	x	21000	=	$18,900	$37,800	$61,200.00
12/31/2020		0.9	x	21000	=	$18,900	$56,700	$42,300.00
12/31/2021		0.9	x	21000	=	$18,900	$75,600	$23,400.00
12/31/2021		0.9	x	16000	=	$14,400	$90,000	$9,000.00

Double-Declining-Balance Depreciation Schedule
		Depreciation for the Year
	Asset	Book		DDB		Depreciation	Accumulated	Book
Date	Cost	Value		Rate		Expense	Depreciation	Value
1/2/2018	$99,000
12/31/2018		$99,000	x	40%	=	$39,600	$39,600	$59,400
12/31/2019		$59,400	x	40%	=	$23,760	$63,360	$35,640
12/31/2020		$35,640	x	40%	=	$14,256	$77,616	$21,384
12/31/2021		$21,384	x	40%	=	$8,554	$86,170	$12,830
12/31/2022			x		=	$3,830	$90,000	$9,000
DDB Rate= 1/ Estimated Life X 2= 1/5X2= 40%

Fifth year depreciation= 12830-9000=$3830

The depreciation method that reports the highest net Income in first year is the straight Line .method. It Produces the lowest depreciation expense and therefore the highest net Income .