Scott Piper Corporation purchased machinery on January 1, 1998, at a cost of ($ 243,000). The estimated

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Scott Piper Corporation purchased machinery on January 1, 1998, at a cost of \(\$ 243,000\). The estimated useful life of the machinery is 5 years, with an estimated residual value at the end of that period of \(\$ 12,000\). The company is considering different depreciation methods that could be used for financial reporting purposes.

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(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 1998 income? In the highest total reported income over the 5 -year period?

(c) Which method would result in the lower reported 1998 income? In the lowest total reported income over the 5 -year period?

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Financial Accounting Tools For Business Decision Making

ISBN: 9780471169192

1st Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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