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fFacetook .(4) WhatsApp / Connect × [The Following Informal C | connect.htrri I https://new cor Down nad music, Secure ::: Apps Ro k marks m- RU Usemame Rlackboard earn The Ricklist Watch O "atm Ma es Onlir HRU Port -Top 100 M ies of A How to DrortNate To TH2 w r Rase l my it Chap 6 Prob 24 G Help Save & Exit Submit Check my work 2 Required information Part 2 of S [The following information applies to the questions displayed below] Three different companies each purchased trucks on January 1, 2018, for $80,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $4,000. All three trucks were drlven 78,000 miles in 2013 55,000 miles in 2019, 50,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $69,000 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. 10 points eBook Answer each of the following questions. Ignore the effects of income taxes. References b-1. Calculate the net Income for 2021? (Round "Per Unit Cost" to 3 decimal places.) Net Income Company AS 50,000 Company B Hill 655 AM O Type here to search f. ^d:) ENG 11/16/2017Explanation / Answer
Answer
Cost
80000
Salvage Value
4000
Depreciable base
76000
Life (in years)
4
SLM Annual Depreciation [76000 / 4]
$19000
Year
2018
2019
2020
2021
Cash revenues
69000
69000
69000
69000
(-) Depreciation
19000
19000
19000
19000
Net Income
50000
50000
50000
50000
Retained earning
Year
2018
2019
2020
2021
Opening Balance
0
50000
100000
150000
Current Income
50000
50000
50000
50000
Closing balance
50000
100000
150000
200000
Cost
80000
Salvage Value
4000
Depreciable base
76000
Life (in years)
4
SLM Annual Depreciation
19000
SLM rate [19000 / 76000]
25%
DDB Rate [25% x2]
50%
Book Value (opening) A
Depreciation @50% B
Ending Book Value A - B
2018
80000
40000
40000
2019
40000
20000
20000
2020
20000
10000
10000
2021
10000
6000 [not 5000 because that will leave salvage value to be $5000 and not $4000 as given in question]
4000
Year
2018
2019
2020
2021
Cash revenues
69000
69000
69000
69000
(-) Depreciation
40000
20000
10000
6000
Net Income
29000
49000
59000
63000
Retained earning
Year
2018
2019
2020
2021
Opening Balance
0
29000
78000
137000
Current Income
29000
49000
59000
63000
Closing balance
29000
78000
137000
200000
Cost
80000
Salvage Value
4000
Depreciable base [80000 – 4000]
76000
Estimated miles
250000
Depreciation per mile [76000 / 250000]
0.304
Year
Miles ran
Depreciation (Miles x $0.304 per mile)
2018
78000
23712
2019
55000
16720
2020
50000
15200
2021
70000
20368 [not $21280, because that will bring salvage value(book value) down to$3088, while it should be only $4000]
Year
2018
2019
2020
2021
Cash revenues
69000
69000
69000
69000
(-) Depreciation
23712
16720
15200
20368
Net Income
45288
52280
53800
48632
Retained earning
Year
2018
2019
2020
2021
Opening Balance
0
45288
97568
151368
Current Income
45288
52280
53800
48632
Closing balance
45288
97568
151368
200000
Company
Net Income
A
50000
B
63000
C
48632
Depreciation
Company
Cost of Assets
2018
2019
2020
TOTAL Depreciation
Book Value on 31 Dec 2020
A
80000
19000
19000
19000
57000
23000
B
80000
40000
20000
10000
70000
10000
C
80000
23712
16720
15200
55632
24368
Company
Retained Earnings
A
200000
B
200000
C
200000
Cost
80000
Salvage Value
4000
Depreciable base
76000
Life (in years)
4
SLM Annual Depreciation [76000 / 4]
$19000
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