Depreciation information for Corales Company is given in BE10.4. Assuming the declining-balance depreciation rate is double the

Question:

Depreciation information for Corales Company is given in BE10.4. Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second years under the declining-balance method.

BE10.4

Chisenhall Company purchased land and a building on January 1, 2020. Management’s best estimate of the value of the land was $100,000 and of the building $200,000. However, management told the accounting department to record the land at $220,000 and the building at $80,000. The building is being depreciated on a straight-line basis over 15 years with no salvage value. Why do you suppose management requested this accounting treatment? Is it ethical?

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...

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