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P10-31A. On January 3, 2016, Fast Delivery Service purchased a truck cost of $62

P10-31A. On January 3, 2016, Fast Delivery Service purchased a truck cost of $62,000. Before placing the truck in service, Fast spent $3,000 painting it, $1,500 replacing tires, and $3,500 overhauling the engine. The truck should remain in service for five years and have a residual value $5,000. The truck’s annual mileage is expected to be 28,000 miles in each of the first four years and $18,000 miles in fifth year__ 130, 000 miles in total. In deciding which depreciation method to use, Steven Kittridge, the general manager, requests a depreciation schedule for each of depreciation methods (straight-line, unit-of-production, and double- declining-balance) REQUIREMENTS; 1-Prepare a depreciation schedule for cash each depreciation method, showing assets cost, depreciation expense, accumulated depreciation, an asset book value. 2- Fast 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 Fast uses the truck. Identify the depreciation method that meets the company’s objectives.

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