P9-28A
On January 9,2010, Swifty Delivery Service purchased a truck at a cost of
$67,000. Before placing the truck in service, Swifty spent $2,200 painting it,
$500 replacing tires, and $5,000 overhauling the engine. The truck should
remain in service for 6 years and have a residual value of $14,700. The truck’s
annual mileage is expected to be 15,000 miles in each of the first 4 years and
10,000 miles in each of the next 2 years-80,000 miles in total. In deciding
which depreciation method to use, Jerry Speers, the general manager, requests
depreciation schedule for each of the depreciation methods (straight-line,
units-of-production, and double-declining-balance.)
Requirements
1.
Prepare a depreciation schedule for each deprecation methods, showing asset
cost, depreciation expense, accumulated depreciation, and asset book value.
2.Swifty
prepares financial statements using the depreciation method that repost the
highest net income in the early years of the asset use. For income-tax
purposes, the company uses the depreciation method that minimizes income taxes
in the early years. Consider the first year that Swifty uses the truck. Identify
the depreciation methods that meet the general manager’s objectives, assuming
the income tax authorities permit the use of the any of the methods
TUTORIAL
PREVIEW
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Staright-Line Depreciation Schedule
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Date
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Asset Cost
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Depreciation Rate
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Depreciable Cost
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Depreciation Expense
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Accumulated
Depreciation
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Asset Book Value
|
|
January 9,2010
|
$74,700
|
|
|
|
|
$74,700
|
|
December 31, 2010
|
|
1/6
|
60,000
|
$10,000
|
$10,000
|
64,700
|
File
name: P9-28A Swifty Delivery Service.xlsx File type: xlsx PRICE:$15
