Stanley Lawn Service purchased new equipment on January 1, 2012, at a cost of $45,000. The company

Question:

Stanley Lawn Service purchased new equipment on January 1, 2012, at a cost of $45,000. The company estimates the equipment has a useful life of four years with a salvage value of $6,000.

Requirements

1. Prepare two different depreciation schedules for the equipment—one using the straight-line method and the other using the double-declining balance method. (Round to the nearest dollar.)

2. Determine which method would result in the greater net income for the year 2014.

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...