The following information applies to the questions displayed below.] Three diffe

Question

The following information applies to the questions displayed below.] Three different companies each purchased trucks on January 1, 2016, for $50,000. Each truck was expected to last four years or 200,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 66,000 miles in 2016, 42,000 miles in 2017, 40,000 miles in 2018, and 60,000 miles in 2019. Each of the three companies earned $40,000 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. 12 10.00 points value: Required a-1. Calculate the net income for 2016? (Round your "Per Unit Cost" to 3 decimal places.) Net Income Company A Company B Company C

Explanation / Answer

Company A: Depreciation expense 11250 =(50000-5000)/4 Net income 28750 =40000-11250 Company B: Depreciation expense 25000 =50000*50% Net income 15000 =40000-25000 Company C: Depreciation expense 14850 =(50000-5000)/200000*66000 Net income 25150 =40000-14850

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