[The following information applies to the questions displayed below.] Three different companies each purchased trucks on January 1, 2018, 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 2018, 60,000 miles in 2019, 50,000 miles in 2020, and 70,000 miles in 2021. 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. Required a-1. Calculate the net income for 2018? (Round "Per Unit Cost" to 3 decimal places.) a-2. Which company will report the highest amount of net income for 2018? multiple choice Company A Company B Company C All of the choices
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Required information
[The following information applies to the questions displayed below.]
Three different companies each purchased trucks on January 1, 2018, 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 2018, 60,000 miles in 2019, 50,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $51,000 of cash revenue during each of the four years. Company A uses straight-line
Answer each of the following questions. Ignore the effects of income taxes.
Required
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a-1. Calculate the net income for 2018? (Round "Per Unit Cost" to 3 decimal places.)
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a-2. Which company will report the highest amount of net income for 2018?
multiple choice
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Company A
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Company B
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Company C
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All of the choices
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