Question

On January 3, 2018. Speedy Delivery Senvice purchased a truck at a cot of S90.000 Before placing the uck in service, Speedy pent $4.000 panting000 pacng tres and $4,400 ovehauling the engine The truck shoud remain in service for fve years and have a residual value of 59.000. The truck's annual mileage is expected to be 21,000 mes in each of he fst four years and 16.000 mes in the th year00,000 mies in to n deciding which deprecialion method to use, Steven Ktridge, the general manager, requests a depreciation schedule for each of the depreciation mthods ghne, units-of groduction, and doubie-decning-baan Read the requirements Requirement 1. Prepare a deprecation schedule for each deprecation method, showing asset coet deprecition expense, accumulated 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 13-2018 12-31-2018 12-31-2019 12-31-2000 12-31-2021 12-31-2022 Before completing the units of production depreciation schedule, calculate je depreciation expense per unit. Select the formula, hen enter the amounts and caloulte the depreciatlon expense per unit (Round depreciation expense per unil to two decimal places Depreciation per unt Prepare a depreciation schedule using the units-of production method. (Enter the depreciation per unit to two decimal places, SX.XX) Units-of-Production Depreciation Schedale Phereeriatinn fre the Yaar Choose from any list or enter any number in the input Selds and then continue to the next question

Answer 1

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Speedy Delivery Service		Answer 1
Purchase cost of Truck	90,000.00
Painting cost	4,000.00
Tyre cost	600.00
Engine Overhauling	4,400.00
Total cost of Truck	99,000.00	A
Residual Value	9,000.00	B	Date	Asset Cost	Depreciable Cost	Useful Life	Depreciation Expense	Accumulated depreciation	Book Value
Depreciable Cost	90,000.00	C=A-B	1/3/2018	99,000.00					99,000.00
			12/3/2018		90,000.00	5.00	18,000.00	18,000.00	81,000.00
Straight Line Method			12/3/2019		90,000.00	5.00	18,000.00	36,000.00	63,000.00
Depreciable Value	90,000.00	See C	12/3/2020		90,000.00	5.00	18,000.00	54,000.00	45,000.00
Life	5.00	D	12/3/2021		90,000.00	5.00	18,000.00	72,000.00	27,000.00
Annual depreciation	18,000.00	E=C/D	12/3/2022		90,000.00	5.00	18,000.00	90,000.00	9,000.00
Units of Production Method
Depreciable Value	90,000.00	See C
Life (Miles)	100,000.00	F
Depreciation per Mile	0.90	G=C/F
	H	I=H*G	Date	Asset Cost	Depreciation Expense	Accumulated depreciation	Book Value
	Miles	Depreciation	1/3/2018	99,000.00			99,000.00
Year 1	21,000.00	18,900.00	12/3/2018		18,900.00	18,900.00	80,100.00
Year 2	21,000.00	18,900.00	12/3/2019		18,900.00	37,800.00	61,200.00
Year 3	21,000.00	18,900.00	12/3/2020		18,900.00	56,700.00	42,300.00
Year 4	21,000.00	18,900.00	12/3/2021		18,900.00	75,600.00	23,400.00
Year 5	16,000.00	14,400.00	12/3/2022		14,400.00	90,000.00	9,000.00
Answer 2
For highest ne income in first year depreciation expense should be lowest.
Among Straight Line Method and Units of Production Method, Straight Line Method has less depreciation of $ 18,000 then Units of Production Method of $ 18,900 by $ 900. So Straight Line Method should be used.