omework:. Chapter 10 Homework core: 0 of 20 pts 10-31A (similar to) 4-4 of 4 (3
ID: 2432201 • Letter: O
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omework:. Chapter 10 Homework core: 0 of 20 pts 10-31A (similar to) 4-4 of 4 (3 complete) , HW Score: 55.56%, 2 Question Helo On January 2.2018, On Time Delivery Service purchased a truck at a cost of $67 000 Before placing the truck in service, On Time spent $2.200 painting it, $1.500 replacing tires, and $4 000 overhauling the engir The truck should remain in service for five years and have a residual value of $5.100 The truck's annual mileage is expected to be 20000 miles in each of the first four years and 12 800 miles in the fith year 92 800 miles in total. iIn deciding which depreciation method to use, Harvey Warner the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line units-of production, and double-declining-balance) Read the tequirements Requirement 1. Prepare a depreciation schecule for each depreciation method showing asset cos!. depreciation expensel accumulated depreciation. and asset book value Segin by precaring a depreciation schedule using the straight-line methood AcExplanation / Answer
Cost of painting & tyres & overhauling of engines,as they were incurred before placing the truck in service ,are fully capitalised & depreciated over the truck's useful life of 5 years. So, asset cost= 67000+2200+1500+4000= 74700 Straight-line method--- 1/5=20% (74700-5100)=69600/5= 13920 Depreciation for the Year Date Asset Cost Depreciable cost(Asset Cost-Residual Value) Depreciation Rate(1/(5 yrs.) Depn. Exp. Acc. Depn. Book Value 1 2 3 4 5=3*4 6=previous 6+current 5) 7=2-6 1/2/2018 74700 69600 74700 12/31/2018 74700 69600 20% 13920 13920 60780 12/31/2019 74700 69600 20% 13920 27840 46860 12/31/2020 74700 69600 20% 13920 41760 32940 12/31/2021 74700 69600 20% 13920 55680 19020 12/31/2022 74700 69600 20% 13920 69600 5100 Units of Prodn. method--- (74700-5100)= $ 69600/92800 miles Depreciation for the Year Date Asset Cost Depreciable cost(Asset Cost-Residual Value) Depreciation Rate Depn. Exp. Acc. Depn. Book Value 1 2 3 4 5=3*4 6=previous 6+current 5) 7=2-6 1/2/2018 74700 69600 74700 12/31/2018 74700 69600 20000/92800 15000 15000.00 59700 12/31/2019 74700 69600 20000/92800 15000 30000.00 44700 12/31/2020 74700 69600 20000/92800 15000 45000.00 29700 12/31/2021 74700 69600 20000/92800 15000 60000.00 14700 12/31/2022 74700 69600 12800/92800 9600 69600.00 5100 Double Declining Balance method--- Straight line rate*2 =20%*2=40% on Declining balance Depreciation for the Year Date Asset Cost Depreciable cost Depreciation Rate Depn. Exp. Acc. Depn. Book Value 1 2 3 4 5=3*4 6=previous 6+current 5) 7=2-6 1/2/2018 74700 74700 74700 12/31/2018 74700 74700 40% 29880 29880 44820 12/31/2019 74700 44820 40% 17928 47808 26892 12/31/2020 74700 26892 40% 10756.8 58565 16135.2 12/31/2021 74700 16135.2 40% 6454.08 65019 9681.12 12/31/2022 74700 9681.12 40% 3872.45 68891.33 5808.67 2… Depreciation in the 1st year as per the 3 methods St.line 13920 Units of prodn. 15000 DDB 29880 From the above, the depreciation method , that will help to project highest net income,in the 1st year of truck-use, is the least depreciation expense method,ie. Straight-line method with $ 13920 as depn. Expense.
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