Question

Required information [The following information applies to the questions displayed below Three different companies each purchased trucks on January 1, Year 1, for $88,000. Each truck was expected to last four Years or 250,000 miles. Salvage value was estimated to be $6,00o. All three trucks were driven 77,000 miles in Year 1, 57000 miles in Year 2, 52,000 miles in Year 3, and 72,000 miles in Year 4. Each of the three companies earned $77,000 of cash revenue quring each of the four Years. Company A uses straight-line depreciation, company B uses double- declining-balance depreciation, and company C uses units-of-production depreciation. 5 Answer each of the following questions. Ignore the effects of income taxes. Required a-1. Calculate the net income for Year 1 a-2. Which company will report the highest amount of net income for Year 1? eces Complete this question by entering your answers in the tabs below. Required A1 Required A2 Calculate the net income for Year 1. (Round your "Per Unit Cost" to 3 decimal places.) Net Income Company A Company B Company C

Answer 1

a1) calculate net income

	Company A	Company B	Company C
Cash revenue	77000	77000	77000
Less: Depreciation expense	-20500	-44000	-25256
Net income	56500	33000	51744

Company A has the highest amount of net income for year 1