P9-31A Determining asset cost, preparing depreciation schedules (3 methods), and identifying depreciation results that meet management objectives On January 3, 2018, Rapid Delivery Service purchased a truck at a cost of $100,000. Before placing the truck in service, Rapid spent $3,000 painting it, $600 replacing tires, and $10,400 overhauling the engine. The truck should remain in service for five years and have a residual value of $12,000. The truck's annual mileage is expected to be 32,000 miles in each of the first four years and 8,000 miles in the fifth year-136,000 miles in total. In deciding which depreciation method to use, Andy Sargeant, the eral manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance). Learning Objectives 1, 2 1. Units-of-production, 12/31/18, Dep. Exp. $24,000 gen- Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. 2. Rapid prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. Consider the first year that Rapid uses the truck. Identify the depreciation method that meets the company's obiectives
P9-31A Determining asset cost, preparing depreciation schedules (3 methods), and identifying depreciation results that meet management objectives On January 3, 2018, Rapid Delivery Service purchased a truck at a cost of $100,000. Before placing the truck in service, Rapid spent $3,000 painting it, $600 replacing tires, and $10,400 overhauling the engine. The truck should remain in service for five years and have a residual value of $12,000. The truck's annual mileage is expected to be 32,000 miles in each of the first four years and 8,000 miles in the fifth year-136,000 miles in total. In deciding which depreciation method to use, Andy Sargeant, the eral manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance). Learning Objectives 1, 2 1. Units-of-production, 12/31/18, Dep. Exp. $24,000 gen- Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. 2. Rapid prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. Consider the first year that Rapid uses the truck. Identify the depreciation method that meets the company's obiectives
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter9: Depreciation (deprec)
Section: Chapter Questions
Problem 1R: Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an...
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Question 31
Transcribed Image Text:P9-31A Determining asset cost, preparing depreciation schedules (3 methods),
and identifying depreciation results that meet management objectives
Learning Objectives 1, 2
On January 3, 2018, Rapid Delivery Service purchased a truck at a cost of $100,000.
Before placing the truck in service, Rapid spent $3,000 painting it, $600 replacing tires,
and $10,400 overhauling the engine. The truck should remain in service for five
and have a residual value of $12,000. The truck's annual mileage is expected to be
32,000 miles in each of the first four years and 8,000 miles in the fifth
miles in total. In deciding which depreciation method to use, Andy Sargeant, the gen-
eral manager, requests a depreciation schedule for each of the depreciation methods
(straight-line, units-of-production, and double-declining-balance).
1. Units-of-production, 12/31/18,
Dep. Exp. $24,000
years
year-136,000
Requirements
1. Prepare a depreciation schedule for each depreciation method, showing asset cost,
depreciation expense, accumulated depreciation, and asset book value.
2. Rapid prepares financial statements using the depreciation method that reports
the highest net income in the early years of asset use. Consider the first
Rapid uses the truck. Identify the depreciation method that meets the company's
objectives.
year
that
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