On January 1, 2010, Sparks Company purchased for $2,160,000 snow-making equipment having an estimated useful life of

Question:

On January 1, 2010, Sparks Company purchased for $2,160,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $90,000.

Required:

a. Prepare a depreciation schedule for the equipment using the double declining method; assume that Spark elects to switch to the straight line method in year three.

b. Indicate any related reporting required in order for Spark’s financial statements to be in accordance with GAAP.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... 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...