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
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Answer #1
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
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