Miriam Corporation purchased machinery on January 1, 2014, at a cost of $380,000. The estimated useful life
Question:
Miriam Corporation purchased machinery on January 1, 2014, at a cost of $380,000. The estimated useful life of the machinery is 5 years, with an estimated salvage value at the end of that period of $20,000. The company is considering different depreciation methods that could be used for financial reporting purposes.
Instructions
(a) Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.
(b) Which method would result in the higher reported 2014 income? In the higher total reported income over the 5-year period?
(c) Which method would result in the lower reported 2014 income? In the lower total reported income over the 5-year period?
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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
a c 15 X 2 40 d Adjusted so ending book value will equal salvage value b Straightline de...View the full answer
Accounting Tools for Business Decision Making
ISBN: 978-1118128169
5th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
