Megan Corporation purchased machinery on January 1, 2022, at a cost of $250,000. The estimated useful life

Question:

Megan Corporation purchased machinery on January 1, 2022, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $30,000. 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. (Round to the nearest dollar.)

b. Which method would result in the higher reported 2022 income? In the highest total reported income over the 4-year period?

c. Which method would result in the lower reported 2022 income? In the lowest total reported income over the 4-year period?

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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

Fantastic news! We've Found the answer you've been seeking!