Tabesh Corporation purchased machinery on January 1, 2007, at a cost of $210,000. The estimated useful life
Question:
Tabesh Corporation purchased machinery on January 1, 2007, at a cost of
$210,000. The estimated useful life of the machinery is 4 years, with an estimated residual value at the end of that period of $10,000. 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 2007 income? In the highest total reported income over the 4-year period?
(c) Which method would result in the lower reported 2007 income? In the lowest total reported income over the 4-year period?
Step by Step Answer:
Financial Accounting Tools For Business Decision Making
ISBN: 9780471730514
4th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso