(1) Pharoah Ltd. purchased a new machine on April 4, 2014, at a cost of $168,000. The company estimated that the machine would have a residual value of $14,000. The machine has a four-year life.

Calculate depreciation for the machine under each of the following method - Diminishing-balance using double the straight-line rate for 2014 through to 2018.

(2) Which depreciation method results in the highest net income? Why?

A) Straight Method

B) Diminishing-balance method

C) Units-of-production method

D) No Impact

E) All three methods are the same