Question

Three different companies each purchased trucks on January 1, 2018, for $76,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6,000. All three trucks were driven 81,000 miles in 2018, 55,000 miles in 2019, 46,000 miles in 2020, and 71,000 miles in 2021. Each of the three companies earned $65,000 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. b-1. Calculate the net income for 2021? (Round "Per Unit Cost" to 3 decimal places.)

Answer 1

					Double declining depreciation
	A	B	C		Year	Openign balance	Depreciation@ 50% of WDV	Closing balance
Revenue	$        65,000	$        65,000	$        65,000		1	$          76,000	$          38,000	$        38,000
Less: Depreciation					2	$          38,000	$          19,000	$        19,000
Straight line (76000-6000)/4	$        17,500				3	$          19,000	$            9,500	$          9,500
Double declining balance		$          3,500			4	$            9,500	$            3,500	$          6,000
Unit of production			$        19,040		Unit of productio method
Net income for 2021	$ 47,500	$        61,500	$        45,960		Year	Kms	Depreciation	WDV
					1	$          81,000	$          22,680	$        47,320
					2	$          55,000	$          15,400	$        31,920
					3	$          46,000	$          12,880	$        19,040
					4	$          71,000	$          19,040	$                 -
							$          70,000