On January 2, 2018, Jatson Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,000 with an estimated residual value of $5,000.
a. Prepare a complete depreciation table under the three depreciation methods listed as follows. 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 2018.
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 these methods.