Question

Required information [The following information applies to the questions displayed below.) Three different companies each purchased trucks on January 1, Year 1, for $62,000. Each truck was expected to last four Years or 250,000 miles. Salvage value was estimated to be $2,000. All three trucks were driven 75,000 miles in Year 1, 60,000 miles in Year 2, 50,000 miles in Year 3, and 70,000 miles in Year 4. Each of the three companies earned $51,000 of cash revenue during 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. Answer each of the following questions. Ignore the effects of income taxes. C-1. Calculate the book value on the December 31, Year 3, balance sheet. C-2. Which company will report the highest book value on the December 31, Year 3, balance sheet? Complete this question by entering your answers in the tabs below. Required C1 Required C2 Calculate the book value on the December 31, Year 3, balance sheet. (Round your "Per Unit Cost" to 3 decimal places.) Book Value Company A Company B Company C < Required c1 Required C2 >

Answer 1

C1) Calculate book value at the end of year 3

	Company 1	Company 2	Company 3
Cost	62000	62000	62000
Accumulated depreciation	(62000-2000/4*3) = 45000	(31000+15500+7750) = 54250	185000*.24 = 44400
Book value	17000	7750	17600

Company 3 report the highest book value