Axel Corporation purchased machinery on January 1, 2001, at a cost of $202,000.

different methods. The estimated useful life of the machinery is 5 years, with an estimated residual value at

(SO 3, 9) the end of that period of $12,000. The company is considering different depreciation methods that could be used for financial reporting purposes.

Instructions

(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 2001 income? In the highest total reported income over the 5-year period?

(c) Which method would result in the lower reported 2001 income? In the lowest total reported income over the 5-year period?