Question

# Three different companies each purchased trucks on January 1, 2018, for \$82,000. Each truck was expected...

Three different companies each purchased trucks on January 1, 2018, for \$82,000. 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 79,000 miles in 2018, 56,000 miles in 2019, 51,000 miles in 2020, and 71,000 miles in 2021. Each of the three companies earned \$71,000 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

 Net Income Company A \$52,000 Company B Company C

 Company A Straight line method Depreciation = (82000-6000)/4 19000 Cash revenue 71000 Less Depreciation 19000 Net income 52000 Company B Double declining method = 1*200%/4 50% Depreciation = 82000*50% 41000 Cash revenue 71000 Less Depreciation 41000 Net income 30000 Company C Depreciation per mile = (82000-6000)/250000 0.304 For 2018 .304*79000 24016 Cash revenue 71000 Less Depreciation 24016 Net income 46984