Question

On January 3, 2018, Nimble Delivery Service purchased a truck at a coet of $00,000 Belore placing the truck in service, Nimble spent $3,000 painting it, $1,200 replacing tres, and $4,800 overhauling the engine. The tuck 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 each 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, Miksl Johnson, the general manager, requests a depreciation schedule for each of the deprecieion methods (straight-ine, units-of-production, and double-declining balance) Read the ecuiement Requirement 1. Prepare a depreciation schedule for esch depreciation method, showing asset co0st, depreciation expense, accumulated deprecietion, and asset book value. Begin by preparing a depreciation schedue using the straight-line 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 101000 12-31-2018 12-31-2019 12-31-2020 12-31-2021 12-31-2022 Choose from any ist or enter any number in the input flelds and then continue to the next question

Answer 1

Hence Answer 1). Straight Line Method.

In this Sum, they Demand three method of depreciation and its impact over the net income. I). First we calculate depreciation under straight line method. (Asset Purchase cost-G=F) Accumulated В (C/D-E) Deprecation A G Assets Book Value Depriciable cost Useful Life Date Cost Expenses Deprecation 3/1/2018 99000 0 99000 12/31/2018 90000 5 18000 18000 81000 12/31/2019 12/31/2020 36000 90000 5 18000 63000 54000 90000 5 18000 45000 12/31/2021 27000 90000 5 18000 72000 12/31/2022 90000 5 18000 90000 9000 II). Calculate depreciation under Unit of Production Methods. I) a. Calculate depreciation per Unit (A/B C) А Estimated total unit of Depreciable cost production Depreciation per Unit 90000.00 100000 0.9 (Asset Purchase (C D-E) cost-G-F) А В D G No of Units Accumulated Assets Deprecation Deprecation Produced Deprecation Book Value Date Cost Expenses pet Unit 3/1/2018 99000 0 99000 12/31/2018 21000 0.9 18900 18900 80100 12/31/2019 0.9 21000 18900 37800 61200 12/31/2020 21000 0.9 18900 56700 42300 12/31/2021 21000 0.9 18900 75600 23400 12/31/2022 16000 0.9 14400 90000 9000 II). Calculate depreciation under Double Declan method (Asset Purchase (C D=E) cost-G=F) A C G Date Book value DOB rate Deprecation Accumulated Book Value Assets Cost Expenses Deprecation 3/1/2018 99000 00066 12/31/2018 40% 99000 39600 39600 59400 12/31/2019 40% 63360 59400 23760 35640 12/31/2020 40% 77616 21384 35640 14256 12/31/2021 40% 8553.6 86169.6 12830.4 21384 12/31/2022 12830.4 86169.6 12830.4 Answer 1). The depreciation method that report the highest net income in the first year probably the method which has lowest deprecation for the first year. (Straight Line Method) Answer 2). "Straight Line Method" produce the 18,000/- as deprecation expenses and therefore the highest income. Notes: Asset Cost Purchase cost + Painting Cost+ Tyre replacement cost + Engine repaired cost (before initial usage of truck) Depriciable Value Asset Cost- Residual Value Accumulated Depreciation Asset Cost- Book Value Residual value not considered in Double decline balance method in this sum

Answer 2) 18,000/-

In this Sum, they Demand three method of depreciation and its impact over the net income. I). First we calculate depreciation under straight line method. (Asset Purchase (C/D=E) Cost-G=F) Accumulated A B G Assets Deprecation Depriciable cost Useful Life Expenses Book Value Date Cost Deprecation 3/1/2018 99000 00066 12/31/2018 90000 5 18000 18000 81000 12/31/2019 90000 5 18000 36000 63000 12/31/2020 54000 90000 5 18000 45000 12/31/2021 27000 90000 5 18000 72000 12/31/2022 90000 5 18000 90000 9000 I). Calculate depreciation under Unit of Production Methods. I) a. Calculate depreciation per Unit (A/B=C) A Estimated total unit of production Depreciable cost Depreciation per Unit 90000.00 100000 0.9 (Asset Purchase Cost-G=F) (C*D=E) A C G Accumulated Deprecation pet Number of Deprecation Assets Book Value Date Cost Unit Units Expenses Deprecation 3/1/2018 99000 0 99000 12/31/2018 21000 0.9 18900 18900 80100 12/31/2019 21000 0.9 18900 37800 61200 12/31/2020 21000 0.9 18900 56700 42300 12/31/2021 21000 0.9 18900 75600 23400 12/31/2022 16000 0.9 14400 90000 9000 II). Calculate depreciation under Double Declan method (Asset Purchase (C D-E) cost-G=F) A. B Book value DOB rate Accumulated Book Value Date Assets Deprecation Cost Expenses Deprecation 3/1/2018 99000 00066 12/31/2018 40% 99000 39600 39600 59400 12/31/2019 59400 40% 23760 63360 35640 12/31/2020 40% 35640 14256 77616 21384 12/31/2021 21384 40% 8553.6 12830.4 86169.6 12/31/2022 12830.4 86169.6 12830.4 Answer 1). The depreciation method that report the highest net income in the first year probably the method which has lowest deprecation for the first year. (Straight Line Method) Answer 2). "Straight Line Method" produce the 18,000/- as deprecation expenses and therefore the highest income Notes: Asset Cost Purchase cost + Painting Cost + Tire replacement cost + Engine repaired cost (before initial usage of truck) Depriciable Value Asset Cost- Residual Value Accumulated Depreciation Asset Cost - Book Value Residual value not considered in Double decline balance method in this sum