Messer Company purchased equipment for $24,000. The company is considering whether t o determine annual depreciation using

Question:

Messer Company purchased equipment for $24,000. The company is considering whether t o determine annual depreciation using the straight-line method or the declining-balance method at 150 percent of the straight-line rate. Waller expects to use the equipment for 10 years, at the end of which it will have an estimated of $4,000. Prepare a comparison of these two alternatives for the first two years Messer will own the equipment.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...