Question
Boscan Corporation purchased machinery on January 1, 2014, at a cost of $326,000. The estimated useful life of the machinery is 4 years, with an
Boscan Corporation purchased machinery on January 1, 2014, at a cost of $326,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $27,400. The company is considering different depreciation methods that could be used for financial reporting purposes.
Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate. (Round answers to 0 decimal places, e.g. 125.)
* Depreciation expense for 2017 under Double declining-balance is adjusted so that ending book value is equal to salvage value.
Which method would result in the higher reported 2014 income?
Which method would result in the lower reported 2014 income?
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