On January 2, 2011, Jansing Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,000 with a residual value of $5,000.

a. Prepare a complete depreciation table under the three depreciation methods listed below. Use a format similar to the illustrations in Exhibits 9–4, 9–5, and 9–6. In each case, assume that a full year of depreciation was taken in 2011.

1. Straight-line.

2. 200 percent declining-balance.

3. 150 percent declining-balance with a switch to straight-line when it will maximize depreciation expense.

b. Comment on significant differences or similarities that you observe among the patterns of depreciation expense recognized under each of thesemethods.

Transcribed Image Text:

Depreciation Schedule: 150% Declining-Balance Method Book Value $17,000 11,900 8,330 5,831 3,915 2,000 Depreciation Accumulated Year Computation Expense Depreciation First Second Third Fourth Fifth $17,000 11 ,900 $5,100 3,570 2,499 ,916 1,915 $15,000 $ 5,100 8,670 11,169 13,085 15,000 30% 30% 30% 8,330 (5,831 -2,000)+ 2 3,915 2,000 Total